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Islamic Finance - Theory and Practice
Islamic Finance - Theory and Practice
Mills
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This book reviews the Islamic opposition to interest and assesses the feasibility of a non-interest financial system in light of current economic theory. The Islamic critique of interest is set against a discussion of the methodology of Islamic economics and the opposition to interest within the Judaeo-Christian tradition. The range of Islamic non-interest financial contracts is then detailed along with a review of the performance of Islamic banks to date; a model of the allocation of finance within a non-interest system is then presented. Assessment of the issues raised is made within the context of economic literature concerning debt versus equity finance; this includes an examination of banking instability and the business cycle, the determinants of levels of saving and the implications for public finance. The conclusions outline the advantages and disadvantages of a theoretical non-interest economy, affirm the theoretical case for the prohibition of interest, and draw practical lessons for contemporary Western economies.
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