What is the definition of interest in Islam ? Anything in addition to the principal or price? Is modern economics possible if Riba is forbidden?
1 Answer
I found Prof. Farooq's article here in the Arab Law Quarterly useful. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1412753 He goes through the ahadith on riba and the very early scholarship, concluding that 1) riba al jahiliyya was really the exorbitant and arbitrary increase ("redoubling") of unpaid debt levied by moneylenders upon poor debtors who could not pay outstanding debt, and 2) he does not find evidence or reference in the very early literature that a predetermined agreed upon stipulated increase on a loan was riba. This idea was introduced later by scholar al Jassas, (AH 370) without good justification, according to Farooq.
This supports the idea that riba is similar to loan sharking and predatory lending on the poor today. Most interest in modern financial markets is not riba. But most scholars seem to think otherwise.
