Open AccessUnderstanding the Causes of the Debt-Crisis: Interest-Based Financing
Author(s) -
Abdul Karim Abdullah
Publication year - 2012
Publication title -
islam and civilisational renewal
Language(s) - English
Resource type - Journals
eISSN - 2041-8728
pISSN - 2041-871X
DOI - 10.52282/icr.v3i4.511
Subject(s) - economic shortage , debt financing , debt , finance , islam , economics , context (archaeology) , profit (economics) , perspective (graphical) , business , microeconomics , government (linguistics) , paleontology , linguistics , philosophy , theology , artificial intelligence , computer science , biology
This article looks at riba-based financing from the perspective of efficiency, within the context of Islam. In particular, it tries to address the question whether interest-based financing results in a more efficient allocation of resources, as claimed by its supporters, than financing on the basis of profit and loss sharing, as claimed by the supporters of Islamic finance. Efficiency is used in this article primarily in its macroeconomic sense, in which it signifies the production of goods and services that meet the needs of the people, without generating persistent surpluses or shortages.