Entering the Lizard's Burrow

(Autosaved) Entering the Lizard's Burrow

Ammar Fairdous speaks on behalf of MFAS at the International Seminar of Islamic Economics at the University of Muhammadiyah, Malang, Indonesia on


بسم اللَّه الرحمن الرحيم
وصلى الله على سيدنا محمد وعلى ءاله وصحبه أجمعين وسلّم


Entering the Lizard’s Burrow – Are we Following in the Footsteps of the Jews and the Christians?

Author:  Ammar A. Fairdous, University of East Anglia, Norwich - UK. PhD Candidate in the Faculty of Law

Publication date: 10th June 2014


Introduction 

In recent decades Islamic jurists have taken the industry of Islamic banking and finance to task on the grounds that the contractual forms offered by Islamic banks present a de jure distinction that lacks a de facto difference from their conventional counterparts. This is will-attested in many of the Islamic banking financial instruments which are in essence simple classical contracts that have been restructured into complex contractual forms in order to achieve similar ends to explicitly interest-based transactions.1 

Islamic banks, with the help of their paid Sharia boards, have devised a number of financially engineered and carefully structured arrangements through which the risk of failure is borne entirely by the customer, while the bank receives a fixed rate of return at the end of the contractual period. This rate of return, furthermore, is very often based on a benchmark interest rate such as LIBOR. Thus, in the course of time, wealthy Islamic banks become progressively richer, whilst the poor customers become poorer and poorer, as is the case with conventional banks. 

Yet this practice has not been without its critics, who often assert that IBF is merely a semiotic cloaking device intended to disguise the charging of interest (i.e. the substitution of ‘profit rate’ or ‘mark-up rate’ for ‘interest rate’).2 The proponents of Islamic banking, on the other hand, reject this view, alleging that these restructured transactions are fully “Sharia compliant” since it is the contractual form, rather than the commercial substance, that counts in Islamic law vis-a-vis commercial transactions.3 

Interestingly, however, the argument with regard to what constitutes interest is not confined to the Muslim world. Both Talmudic and Canon law in their respective histories imposed severe restrictions on charging interest, which both Jewish and Christian lenders long sought to circumvent.4  

Although Islam may appear as the only religion in the Abrahamic stable that maintains a prohibition upon usury at present, yet this distinctiveness was not always the case. Both Judaism and Christianity have a long and varied history of opposition to the practice.

It is the purpose of this presentation, therefore, to trace the teachings on usury and its theological interpretations in the scriptures of the people of the book, in order to examine their relevance to the development of lending and credit laws in the pre-modern and modern worlds, with particular regard to the development of the Islamic banking industry today.

Usury in Judaism

Jews and Usury

In Surat an-Nisa, ayah no.161, Allah Ta ‘ala said regarding the Jews, that which means:

“That they took usury, though they were forbidden; and that they devoured men's substance wrongfully; we have prepared for those among them who reject faith a grievous punishment.”

It may be noted that unlike Surat Ar-Rum, ayah 39, in which usury is linked with the verb ‘give’, in this ayah, when usury is related to the actions of  the Jews, the verb ‘take’ is used instead. This would indicate the tendency of the Jews to act as takers of riba, rather than as payers, in the Medinan community of the time as well as throughout history. 

The usurious practices of the Jews appear to have incited opprobrium from a very early date.5 A papyrus from ancient Egypt (dated at 41 A.D.) shows Heracleides, a young man, being advised to be careful with moneylenders and especially not to fall into the hands of the Jews.6 

Jewish moneylenders were also infamous in the Muslim world of Babylonia (750–1258 AD). Ibn Taghri, an Egyptian historian, writes that in 908 AD Muqtadir Billah, the Abbasid Caliph, created a register of Jewish bankers.7 Muqtadir himself used to borrow 30,000 dinars per month from two Jewish bankers to fund the infantry in Baghdad, the Capital of the Empire.8 

They had been held notorious as usurers across mediaeval Europe as well. At the time, the Catholic Church had strictly enforced a ban on Christian involvement in usury, whilst acknowledging the right of Jews to engage in the practice. According to some historians, the Church turned a blind eye toward Jewish usurers in order to enable the papacy to continue raising funds for the “greater good” of crusading success, without directly exposing Christians to the taint of usury.9 At any rate, the ban left Jews in an advantageous position with respect to the entire credit market across Europe. 

The Jews were also involved in moneylending activities under Ottoman dispensation. Many of the cases cited in the Jewish Responsa literature, as well as in Turkish archives (dated from the 16th to 18th centuries) attest that Jewish creditors operated on a large scale in both Arabic and non-Arabic-speaking lands. They were not only “selling” interest loans to “Muslims in villages”, as mentioned in one Responsum, but also financing merchants, prominent personages, and sometimes local governors.

At the present time, it can be observed that of the seven Federal Reserve Board governors, four are Jews. And of the twelve Federal Reserve District Bank presidents, four are Jews. 

Against this background, the question may arise as to why Jews, in general, tended to be so intensely involved in financial activities during much of their history. Part of the answer is to be found in the position of the Torah and other Jewish writings on lending money for profit.  While both Canon and Islamic law largely excluded mediaeval Christians and Muslims from taking interest, the Jewish law appears not to act in the same way for Jews. Dealing in usury seems to be opposed by very few real obstacles. Questions as to how such dealings were justified, and whether or not lending money for profit is permissible under Jewish law can only add to the controversies noted above.   

The Jewish Law – Halakha 

Since this section will be dealing primarily with Jewish law, a brief introduction to the nature and sources of Jewish law would be appropriate. Jewish law is known as Halakha. The term is derived from the Hebrew root halokh, which means “to go”. It implies the path or the way in which a Jew should conduct himself in order to comply with God’s will. As a legal system, Halakha originates in different sources. 

The first and primary source of Jewish law is the written Torah - the five books of Moses - the Pentateuch. The written Torah is the origin and constitution of Jewish law. The second major source is the oral Torah (the Talmud), which consists of the Mishnah and Gemara. These are redactions, interpretations, and extensions of the written Torah. 10 The final major source of Halakha consists of the Responsa, which are the legal opinions that are issued by rabbis, scholars or heads of academies in response to questions addressed to them.11 

All of these three sources, along with legislation and custom, comprise the main body of Halakha. Hence, it will be important, in trying to move toward a Judaic understanding of usury, to address in some detail the concept of usury as found in the Torah, the Talmud and the rabbinical commentaries.

Usury in the Torah    

The Torah includes three statements of the law prohibiting interest. The most famous and comprehensive of these statements is that found in Deuteronomy 23:20-21, which reads:

"You shall not lend upon interest to your brother; interest on money, interest on victuals, interest on anything that is lent on interest. To a foreigner you may lend upon interest, but to your brother you shall not lend upon interest; that the lord your God may bless you … " Deuteronomy 23:20-21

Here, the prohibition includes not only money or food but also anything that is lent for interest. Curiously enough, the Hebrew word used for “interest” in this passage is neshekh, which literary means bite, as in a snakebite. According to more than one commentator, this term is used because the victim of snakebite would feel slightly uncomfortable at the initial stage, but later the venom spreads throughout the entire body till it reaches the vitals. So too, with interest which at first might be bearable, but with time it accumulates to become a tremendous sum, leaving the lender in an irrecoverable situation.

It is interesting to note in this analogy the Jewish social attitude toward interest. This also might be more evident in the rabbinical literature in which, for example, a Jewish man is allowed to lend to his wife or his son at interest “only to let them know the taste of usury”.12

Usury in the Talmud 

Because of the severity of the Torah prohibition against usury, the Rabbis took it upon themselves, as a precaution, to ban any payment or transaction which contains either a hint of increase or unearned profit that might accrue to the creditor. The Talmud extended the interest prohibition to include mark-ups for credit sales, future sales, fixed rates of return in partnership agreements, any gift intended to influence the giving of a loan; any gift or service given in thanks for a loan, and praising, complimenting, or offering a blessing to the lender while the loan remains outstanding. All these were seen by rabbis as prohibited forms of usury. 

In fact, Jewish authorities went so far as to forbid a borrower from greeting his creditor in an unusually effusive manner. Some even state that the borrower should not even say "thank you" to the lender.13 Others, however, allow a simple “thank you”.14

However, all these rabbinical laws are limited in their application to transactions between Jews. When transacting with a gentile, a Jew may agree to pay or charge interest without restriction.15 Likewise, in Deuteronomy 23:19–20. The Talmud put it in explicit terms that, “Money may be borrowed from gentiles on usury and lent to them on usury, and the same applies to a resident alien”.16 This is entirely consistent with what Allah Almighty said with regard to the Jews in Surat Aal Imran, ayah 75,  that which means:

That is because they say: We will not be taken to task for whatever we may do to non-Jews


To summarise, the Jewish rabbis appears to interpret the biblical teachings on usury in a fashion that permits the taking of interest from gentiles, whilst prohibiting the same from fellow Jews. Nevertheless, they developed several legal devices in order to evade the prohibition of taking interest even from fellow Jews. 

Throughout the centuries, Jewish borrowers and lenders found various ways to circumvent the prohibition on ribbit, including revocable sales or phantom sales and transactions through non-Jewish intermediaries. But the most famous is the heter iska, which is a relatively complicated form of equity partnership that serves as the basis of most loan or loan-like transactions between Jews today.

Revocable sales 

These are a legal fiction involving a loan and a sale, as in the case where a person wishes to borrow one hundred dollars for a year, and the creditor wishes to receive one hundred and ten dollars a year later. In this case, it would be unlawful to enter into an open agreement to lend one hundred dollars in return for repayment of one hundred and ten dollars, because it involves a loan with a stipulated benefit. Instead, the lender would sell the borrower an item of trivial value for a price equal to ten dollars due in a year (the interest component) and then lend him the principal amount, resulting in a net obligation on the borrower to repay the lender the desired return. 

In another form of revocable sale the lender sells the borrower a trivial object to be paid for on the loan due date. The borrower then sells the same object back immediately for cash at the price minus the interest. 

For example I sell my pen to you for 120 dirhams with the money to be paid in a year's time. I buy it back for one hundred immediately. I keep my pen: you have in effect borrowed a hundred dirhams from me for a year at 20 per cent interest.

This is what is known in Fiqh as بيع العينة or what is described in modern Islamic Banks under the name of تورق. It is interesting to note that this interest-masking transaction was devised originally by Jewish money lenders.

Furthermore, it is not only Islamic banks that have sharia boards today. There are many Banks in Israel and even in the United States that serve religious Jews, that employ boards of rabbinical advisors to approve of all transactions and then restructure those transactions that fail to meet the Halachic requirements. The most prominent example is a bank in Baltimore known as the Bank Vaad Hakashrus.

Let us turn our attention now to usury in Christianity.

Usury in Christianity

The Devil’s Work

The Church adopted a hostile attitude towards usury during the majority of its history. There was a time when Christians who asked more than they had given were under pain of refusal of confession, absolution and Christian burial; or the invalidation of wills and excommunication. Any interest charge greater than zero was regarded as usurious. Even hoping for anything beyond one’s principal was declared sinful. Charging interest was equated with the crimes of theft, murder, fornication and heresy; it was considered to be a form of avarice, a moral evil, inherently unjust and a sin against Old and New Testaments alike as well as against Natural Law.

But, the practice today is no longer regarded with quite such dread. The morality of interest-taking seems to be a foregone conclusion amongst most Christians. They may lend or borrow money at moderate interest rates with a clear conscience.

This remarkable reversal of attitude raises awkward questions for the Church. Did she err or simply change the teaching on usury? Is it the only teaching that has been changed due to changing circumstances or have there been others? How could a divine law that is derived by revelation as holy, just and good be subject to such modifications? 

It is the purpose of this section, therefore, to trace the historical development of the concept of usury and to indicate its successive connotations and their social and ethical significance, from the Biblical sources, through the early Fathers, the Scholastics, the Protestant Reformers and the Jesuits to the current state of Christian economic thinking. 

The New Testament Sources   

Usury was customary in the time of Jesus (‘Isa, pbuh). Ironically, one of the places where the practice flourished was in the Temple in Jerusalem. As described in the New Testament, the corridors of the Temple were crowded with moneychangers, who were not only dealing with coins of different denominations, brought to the temple as part of the tithes of Jews, but also allowing interest on money deposited with them. Hence, the Temple of Solomon, the House of God, became, in effect, the birthplace of the Jewish money lender.17 

One can look at the famous account of Jesus’ encounter with the money changers at the Temple in this historical context:

 “Then Jesus went into the temple of God and drove out all those who bought and sold in the temple, and overturned the tables of the money changers and the seats of those who sold doves. He said to them, “It is written, ‘My house shall be called a house of prayer’; but you have made it a den of thieves”.

Curiously enough, Jesus equates money-changing with theft in this famous passage - “it is written, ‘My house shall be called a house of prayer’; but you make it a den of thieves”. His attitude appears to be derived from the fact that many of the moneychangers, besides exchanging coins, were involved indeed in interest-masking transactions as evident in another of the teachings of Jesus himself, namely in Matt. 25:30 where he used the term ‘money-exchangers’ to refer to usurious dealers.18

However, there are three other references to usury in the teachings of Jesus; two are identical and relate to the Parable of the Talents, the third one is found in the Gospel of Luke 6:34-35. 

However, for the sake of brevity I will refer you to the section on usury in Christianity in the supplementary material that will be distributed after this presentation. 

Yet it is important to note that these references have been the subject of considerable controversy among Christians throughout the history of the Church. However, the manner in which they were addressed, at least by the Early Fathers, was not inclined to tolerance. 

The Early Church Fathers  

The early teachers of Christianity are known as the Early Church Fathers. They are regarded, to some extent, as the ‘Salf’ of the Christians. Their opinions are fully honoured by most Christian denominations.

These Fathers vehemently denounced usury in their writings, homilies and moral sermons. They perceived it as unjust, immoral, evil, a snare of the devil, diabolical activity, injury to Christ, as well as a sign of disobedience that brings down God’s wrath. Further, they depicted those involved in the practice as liars, lower than dogs, prolific wild beasts, predators, thieves, murderers, public enemies, menaces, serpents in the garden, eager for the downfall of the innocent for their own gain, and of course there is no place for such individuals in the Lord's eternal tabernacle. Many other illustrations have also been used by them to demonstrate their absolute condemnation of the practice. Usury had no redeeming features in their eyes.

The patristic prohibitions against usury distinguish neither between rates of interest nor between the purposes of loans. “Whatever exceeds the amount loaned” was usury for them. 

But the only exception to the usury prohibition to appear in the patristic sources is that provided by St. Ambrose.:

Upon him whom you rightly desire to harm, against whom weapons are lawfully carried, upon him usury is legally imposed. On him whom you cannot easily conquer in war, you can quickly take vengeance with the hundredth. From him extract usury whom it would not be a crime to kill. He fights without a weapon who demands usury; without a sword he revenges himself upon an enemy, who is an interest collector from his foe. Therefore, where there is the right of war, there is also the right of usury.”19

It cannot escape notice that this statement offers early evidence of the deployment of usury as a deadly offensive weapon.  However, the lead of the Early Church Fathers has been followed by the mediaeval scholastics. 

The Scholastic Interpretation 

The economic teachings of the Church, including the prohibition of interest, began to be widely debated within Christendom from the twelfth century onwards. The group of academic scholars who discussed such matters are known as the Scholastics, the most influential of whom was St. Thomas Aquinas. 

Aquinas argued that the principal function of money is to serve as a medium of exchange.20 Thus, its principal use is its consumption, i.e. one can use the money only by giving it away, or by spending it on something. Money is consumed in its use, and like any other consumed-in-use commodity, its use cannot be separated from its ownership. For example, A cannot lend to B the use of one hundred pounds and at the same time retain the ownership of it; otherwise B will not be able to use it.  Therefore, a money loan can only be transacted through a contract that transfers the ownership of the commodity to the borrower, i.e. only through a sale contract. 

On this basis, Aquinas perceived, and dealt with, money loans as being in essence an immediate sale of money in exchange for money to be received later. But, if it would be unjust to sell one kilo of corn in exchange for two kilos of corn of the same quality, then it would also be unjust to sell one pound now in exchange for two pounds later. 

Those who argued that the one pound extra is for the use of the money neglected the fact that the money was incapable of being used apart from its being consumed.21 To ask for payment for the sale of a thing which not only did not exist, but which was quite incapable of existence, was tantamount to ask something from nothing which is, of course, a violation of natural law. Aquinas says: 

“In those things whose use is their consumption, the use is not other than the thing itself; whence to whomever is conceded the use of such things, is conceded the ownership of those things, and conversely. When, therefore, someone lends money under agreement that the money be integrally restored to him, and further for the use of the money, wishes to have a definite price, it is manifest that he sells separately the use of the money and the very substance of the money. The use of money, however, as it is said, is not other than its substance: whence either he sells that which is not, or he sells the same thing twice, to wit, the money itself, whose use is its consumption and this, is manifestly against the nature of natural justice”22 

Different examples were given by Aquinas in order to illustrate the injustice of the practice.23 From his point of view, charging interest on loans is equivalent to charging for a bottle of wine, and then charging the person again for using the wine to drink it, or charging for a kilo of wheat, and then charging the person again who uses the wheat to consume it. This charging for usura (from the Latin for ‘use’) is obviously unjust.24 

These and other arguments have been deployed by Scholastics in attempting to provide rational explanations for the rejection of usury. The ultimate conclusion drawn from these arguments is that usury is by its very nature unjust. 

Extrinsic Titles

Thus, to the Scholastics, no interest could lawfully be claimed under the intrinsic title of the loan itself, i.e. it was usury to receive anything above the principal by reason of the loan itself. But the Scholastics argued that under certain extrinsic titles, or conditions, the lender could be morally entitled to a return over the principal. They are called extrinsic titles because they were based on circumstance outside the loan itself. The most famous of these extrinsic titles were the following:

-The poena conventionalis

- Interesse which includes damnum emergens and lucrum cessans. 

- Deposit a discrezion

Chronologically, the first one widely used was the poena conventionalis, or a penalty for late payment. According to Scholastics, delay in repaying a loan was a valid title to interest. They argued that “it is just to punish negligent or fraudulent deferment of due payment.” However, poena conventionalis could easily be used as a trick to circumvent the ban on interest. When the lender knew well that the borrower would not be able to return the loan at the designated time, the penalty payment became but a disguised form of usury.

Another extrinsic title approved by the Scholastics was interesse. The term – interesse - derives its name from the words of the Justinian Code “id quod interest,” i.e. the difference between.25 

By Roman law, if a debtor failed to make a payment when due, he could be forced to pay the creditor, in addition to the repayment of the loan, a compensation which is estimated by the difference resulting from the detriment to the creditor's financial position due to the default of the debtor. Once this difference is proved to have occurred, the lender becomes entitled to charge interesse, or the difference between. 

However, the Scholastics developed two extrinsic titles under which interesse or compensation for the loss can be claimed. These titles are damnum emergens (damage suffered) and lucrum cessans (loss of income).26 In the former, the compensation is given to the lender when the delay in the repayment causes him to incur actual loss, whereas in the latter it is given when the lender, by parting with his funds, misses an opportunity to make a profit elsewhere, or what modern economists refer to as ‘opportunity cost’.

Another extrinsic title that was created at the time is deposit a discrezion, or a deposit that yields a return payable by the bankers as a free gift. It has been argued that the Bible forbade usury but it did not forbid bankers to be generous toward depositors and to pay them a specified return on their deposit. 

Along with these extrinsic titles, a dozen or more types of contract have been created through which usury is wont to be cloaked. Most famous was the contractum trinius (lit. triple contract). The contractum trinius involved the combination of three different contracts: a contract of partnership, a contract of insurance; and a contract of sale of profit. Individually these contracts were deemed permissible by the Church, but collectively it yielded a fixed rate of return from the outset. The way it worked was as follows: the lender would invest a sum, equal to the amount of financing required, with the merchant on a profit-and-loss sharing basis.27 The lender, then, would insure his capital investment against loss by means of purchasing insurance from the merchant himself in return for an assignment of the probable future gain. And, finally, the lender would sell to the merchant his share of the uncertain future gain resulting from the investment in exchange for a lesser but certain gain, which often amounted to the rate of five percent of the original capital.28 The net result of these three concurrent and interrelated agreements is that the merchant bore all of the risk of failure, while the lender received a fixed rate of return at the end of the contractual period regardless of whether the business had failed or succeeded. This is tantamount to lending money at a pre-arranged guaranteed fixed rate of return - usury.

Nevertheless, the triple contract received approval at the Congregation of the Jesuits that took place in Rome in 1581. Henceforth, the Jesuits became wholly committed to the defence of this contract and advocated its ‘justice’. 

The Protestant Approach

For fifteen centuries whatever was added to the principal was deemed usury in Christian thought. Early Church Fathers, Councils, Canonists, Popes and Scholastics drew no distinction between rates of interest or between the purposes of loans. All usury was damned and prohibited. The first to make the break with this tradition was highly likely the Protestant leader John Calvin (1509-1564).29 In a letter to Sachinus in 1545, Calvin said that he did not consider usury to be wholly forbidden among Christians unless it be repugnant both to justice and to charity.30 These principles, he argued, are not to be violated by charging a rich man for the use of money especially in view of the new conditions and circumstances of economic life, wherein both creditor and debtor may gain by a loan at interest. Calvin’s opinion that ‘moderate’ usury on business loans and on loans to the rich are legitimate, but that the usury taken from the poor or taken at excessive or illegal rates is uncharitable, unjust and, therefore, illegitimate. 

His new doctrine of the justification of taking ‘reasonable’ usury, or interest by modern definition, initiated an era in which usury was not only legalized but also started to be moralized, or to receive at least a religious sanction. The usurious financiers could now point to an authority who supported their practices. Although his position was fiercely contested especially by many English Protestant Divines, scholars and even parliaments for many years, it eventually found favour across the whole of Christendom, in practice if not in theory. 

To this day, most Protestant Christians believe that what is prohibited in the bible is excessive interest or interest taken from the poor. Catholics also seem to believe in the same thing. In greeting the National Council of Anti-Usury Foundations after today’s weekly general audience, Pope Francis defines usury as:

“the practice of illegally lending money with a very high amount of interest” 

Conclusion 

In the light of this study, it can be seen that the scriptural teachings of the people of the book are replete with passages containing either explicit prohibition of usury or unmistakeable evidence that the practice was scorned and strongly condemned. While these passages remain intact, the theological interpretations of many of them have changed over time in order to evade the strict usury prohibition. 

Misled by Calvin, Christians today separate the interest prohibitions from economics through the adoption of a theological interpretation that distinguishes, in theory, ‘interest’ from ‘usury’. The former is accepted, whilst the latter is not. The taking of interest therefore, is no longer a lively issue for most Christians today, although this was not the case for the greater part of their history. 

Jews, on the other hand, interpret their biblical teachings on usury in a fashion that permits the taking of interest from gentiles and at the same time develops several legal devices to evade the prohibition of taking interest even from fellow Jews.

Yet Muslims appear to be not much better placed. Although they claim to adhere to their anti-usury teachings, many jurists on the payroll of Islamic banks have adopted and adapted a wide range of financial instruments that violate the spirit, but not the letter, of these teachings, just as their medieval Christian and Jewish predecessors did.

Furthermore, many of the Christian and Jewish mediaeval interest-masking transactions are identical, whilst others are very similar, to the financial instruments that are to be found in the Islamic banker’s toolbox today, but of course, bearing superficially palatable Arabic and Islamic names. It would appear that Muslims are following the lead of the mediaeval formalistic approach to the laws pertaining to usury. 

This is reminiscent of the famous hadith in Sahih Muslim in which the Prophet, peace be upon him, said: 

“You would tread the same path as was trodden by those before you inch by inch and step by step so much so that if they had entered into the hole of the lizard, you would follow them in this also. We said: Allah's Messenger, do you mean Jews and Christians? He said: Who else?”31

The Prophet (may peace be upon him) also said in another hadith which has been narrated by Abu Hurayrah, may Allah be pleased with him, that which means: 

 “Do not commit what the Jews committed, breaching what Allah has forbidden, by resorting to the lowest types of حيل or legal Stratagem”32  

Ibn Qayyim prohibited bay' al-'inah narrated the following Hadith that Allah's Messenger  (may peace be upon him) says: 

"A time is certainly coming to mankind when they legalise (Yastahillun) Riba under the name of Bay" (sale)'33

Ibn Umar said: I heard the Prophet of Allah (may peace be upon him) say: 

“when you enter into the ‘inah transaction, hold the tails of oxen, are pleased with agriculture, and give up conducting jihad, Allah will make disgrace prevail over you, and will not withdraw it until you return to your original religion”34

Finally, returning to the question posed in the title of this presentation: Are we following in the footsteps of the Jews and Christians? In posing this question and in my humble attempt to address it directly in this presentation, it has been my sincere intention to share with you all the concerns that have occurred to me in the course of my researches, in the hope that your combined experience and expertise in the field of Islamic Economy are best qualified to arrive at a sound conclusion as to the relevance and usefulness of these modest submissions. Thank you for your patient attention.

Assalamu alaykum.

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1 M.A. El-Gamal, ‘Interest and the paradox of contemporary Islamic law and finance’ 27 Fordham Int'l LJ 108 p 23

2 F. Khan, ‘How ‘Islamic’is Islamic Banking?’ 76 Journal of Economic Behavior & Organization 805

3 T.E. Diwany, T. Ahmad and 1st Ethical Charitable Trust Staff, Islamic Banking and Finance: What It Is and What It Could Be (1st Ethical Charitable Trust 2010) p 134

4 M.H. Lubetsky, ‘Losing Interest: Financial Alchemy in Islamic, Talmudic, & Western Law’ 19 TRANSNATIONAL LAW & CONTEMPORARY PROBLEMS 231

5R.P. Maloney, ‘Usury in Greek, Roman and Rabbinic Thought’ 27 Traditio 79 op cit., p 102

6 Ibid. 

7Islamic Economics Research Bureau, Thoughts on Islamic banking (Islamic Economics Research Bureau 1982) p 187

8 Institute of Bankers in Pakistan, Journal of the Institute of Bankers in Pakistan (1974) p 9

9L. Poliakov, Jewish Bankers and the Holy See from the Thirteenth to the Seventeenth Century (Routledge & K. Paul 1977) op cit., p. 22-4; M.J. Ryan, ‘Law, legislation, and lending: An examination of the influence of the Crusades on the usury prohibition’ p 71

10 H. Danby, The Mishnah (Clarendon Press 1933) p XVII; M. Lewittes, Jewish law: an introduction (J. Aronson 1994) op cit, 50-55

11 L. Jacobs, Theology in the Responsa (Routledge and Kegan Paul 1975)

12 I. Epstein, The Babylonian Talmud (Soncino Press 1935) p. 760

13 Iggrot Moshe, Yoreh De' ah, part 1, sections 80. 

14 Harav S.Z. Auerbach (Minchas Shelomo 27); Harav Y.S. Elyashiv (Mishnas Ribbis 4, note 21); Harav Y. Roth (Questions of Interest, pg. 61). See also Y. Reisman, The Laws of Ribbis: The Laws of Interest and Their Application to Everyday Life and Business (Mesorah 1995) op cit., p.69

15 The Babylonian Talmud , op cit., Baba Mezia, 69b,70b,71a; ibid op cit., p. 94-7

16 BM 5.6

17 M.E. Stevens, Temples, Tithes, And Taxes: The Temple And the Economic Life of Ancient Israel (Hendrickson Publishers 2006), op cit. 

18 In Matt. 25:30, Jesus said “Thou oughtest therefore to have put my money to the exchangers, and then at my coming I should have received mine own with usury”.

19 Ambrose, De Tobia, 15.51 (PL 14.779); ed. L. Zucker,  Ambrosii, De Tobia, 67.

20 Thomas Aquinas, Summa Theologica II-II, q. 78, a. 1, ad 6m, trans. Fathers of the English Dominican Province (New York, Benziger Brothers 1947)

21 ibid

22 De malo, q.13, art. 4, cited in J.T. Noonan, The Scholastic Analysis of Usury (Harvard University Press 1957) op cit., p.53-54. 

23 Aquinas op cit., q. 78, a. 1

24 S. Homer and R.E. Sylla, A history of interest rates (Rutgers Univ Pr 1996) op cit., p. 71

25 T.F. Divine, Interest: An Historical & Analytical Study in Economics & Modern Ethics (Marquette University Press 1959) op cit., p. 53

26 Ibid op cit., p.53

27 Noonan op cit., p. 202-10

28 For instance, person A invests £100 in person B for one year.  A would then insure himself against any loss of wealth by means of a second contract agreed with B at a cost to A of £5. Finally, A would sell back to B the right of any future profits of the investment, for a fee of £10 to be paid by B. The result of these three simultaneously agreed contracts was an interest payment of £5 on a loan of £100 made by A to B. See ibid; Brian M. McCall, The Church and the Usurers: Unprofitable Lending for the Modern Economy (Sapientia Press of Ave Maria University 2013) op cit., p. 90-92; 113; William James Ashley, An Introduction to English Economic History and Theory: The End of the Middle Ages (1906) p. 211

29 It seems difficult to identify who was the first departs the tradition. Rose, Roover and Noonan maintain that it was John Calvin. Divine said that it might be Charles Dumoulin (1500–1566). Munro contends that Calvin’s views were influenced by the Catholic jurist Charles du Moulin (1500-1566). They all, however, lived in France in the sixteenth century.  See respectively, H. Shields Rose, The churches and usury or, The morality of five per cent (Clark 1900) p.29; R. De Roover, ‘The scholastics, usury, and foreign exchange’ 41 The Business History Review 257 op cit., p. 258; Noonan op cit., p. 365; John H Munro, Usury, Calvinism, and Credit in Protestant England: from the Sixteenth Century to the Industrial Revolution (2011) op cit., p. 261; Divine p.89

30 Cited in Georgia Harkness, John Calvin: The Man and His Ethics (Henry Holt and Company 1931) p. 206

31Sahih Muslim, Book 34, Number 6448 (لتتبعن سنن الذين من قبلكم ، شبرا بشبر ، وذراعا بذراع ، حتى لو دخلوا في جحر ضب لاتبعتموهم قلنا : يا رسول الله ! اليهود والنصارى ؟ قال : فمن ؟

32 Ibn Kathir said that this hadith  has  a  good  (jayyid)  chain  of narration. (لا تركتبوا مارتكبت اليهود، فتستحلوا ما حرم الله بأدنى الحيل)

33I'lam al-Muwaqqin, Vol. 3 (يأتي على الناس زمان يستحلون الربا بالبيع

34 Sunan Abu Daud, Hadith No. 3455 (إذا تبايعتم بالعينة وأخذتم أذناب البقر ورضيتم بالزرع وتركتم الجهاد سلط الله عليكم ذلاً لا ينزعه حتى ترجعوا إلى ربكم)