CHAPTER 10 23/05/2001 12:06 pm Page 1 10. Conclusion OUR APPROACH The aim of this book has been to analyse the nature and role of Islamic banks from what we hope is a distinctive East-West perspective. In doing so, the analysis has been based on three cornerstones. Religion First, there was a detailed examination of the philosophical and religious underpinnings of Islamic finance and economics; that is, of the economic and financial environment in which adherents to Islam are allowed to operate. Banking business must be conducted on principles expressed in Islamic law, the shari’a, revolving around the use of productive (real) investment rather than monetary investment that attracts interest and usury (riba). Our approach to these religious requirements has been from two directions. From one side, we have looked at the sources of Islamic law, and the definition of riba, along with the reasons given by Islamic scholars for its prohibition. From the other angle, we have analysed Mosaic Law and Christian doctrine on the question of usury. As the third of the great monotheist religions, Islam shares a common heritage with Judaism and Christianity. Not surprisingly, we found there to be very close parallels between the Christian attitude to usury and the Islamic stand. The sticking point for both is the inequity of the lender demanding, and enforcing by collateral, a fixed return from the entrepreneur irrespective of the yield of the investment project. More unexpected, perhaps, was the finding of close parallels between the financing techniques...
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