THE PROHIBITION OF USURY (RIBA) A MORAL-ETHICAL PERSPECTIVE OF ISLAMIC FINANCIAL AND BANKING LAW: A COMPARATIVE STUDY BETWEEN THE ISLAMIC AND THE CONVENTIONAL MODEL

Abstract

We live in a world which has for all practical purposes, abandoned
religious foundations in its economic systems. In our troubled world –
some of the gravest problems we face is global warming, a food crisis
and poverty – there is a need to return to the Revelation of Harmony and
human reason in our economic thinking. Both the socialist as well as the
capitalist in the economic systems have proven their failure to ensure
economic justice that serves to benefit all in the society, both the rich
and the poor. In particular, capitalism is currently causing a terrifying
scenario by making the rich richer and the poor poorer. In this context,
the fundamental motivation for this research is to examine whether a
Divinely inspired banking system could contribute to alleviating the
global financial crisis that we are facing. In fact, it has been remarked that
the Islamic economic system represents a via media between socialism

and capitalism. Of course, the prohibition of interest/usury rests on an
ethical foundation. It is necessary to reassert that this banking ethic is
based on the avoidance of all form of financial exploitation and having
as its principal objective to combine the purpose of wealth creation and
poverty alleviation.