Usury

Michael Looft
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Michael Looft: Kiva Microfunds

Chapter 5 in Inspired Finance, 2014, pp 107-125 from Palgrave Macmillan

Abstract: Abstract The chief complaint levied against microfinance is that its moneylending operations are usurious. Money lending in general has never quite escaped its pejorative label of usury, for which it has had a long history. In fact, when the ancient Roman politician Cato was asked what he thought of money lending he replied, “You might as well ask me what I think about murder.”1 Long before the Romans, Hindu manuscripts dating from 1500 BCE contain the earliest mention of usury in either religious or secular texts. Two separate admonitions are contained in a list of laws promulgated by the sage Manu to help recreate civilization after the great floods some 10,000 years ago. One admonition is included in a list of offences which also consist of defiling a damsel, breaking a vow, and selling one’s wife or child.2 The other is more descriptive: In money transactions interest paid at one time (not by installments) shall never exceed the double (of the principle); on grain, fruit, wool or hair, (and) beasts of burden it must not be more than five times (the original amount). Stipulated interest beyond the legal rate, being against (the law), cannot be recovered; they call that a usurious way (of lending); (the lender) is (in no case) entitled to (more than) give in the hundred; Let him not take interest beyond the year, nor such as is unapproved, nor compound interest, periodical interest, stipulated interest, and corporal interest.3

Keywords: Interest Rate; Muslim Community; Microfinance Institution; Islamic Finance; Money Lending (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-45078-4_6

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DOI: 10.1057/9781137450784_6

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