INTEREST AND THE MODERN ECONOMY

Arshad Zaman and Asad Zaman
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Arshad Zaman: Lahore University of Management Sciences, Postal: Lahore, Pakistan

Islamic Economic Studies, 2001, vol. 08-2, 61-74

Abstract: As professional economists, we are frequently asked whether the modern economy can function without a market for interest-based credit. This question has acquired some urgency in the wake of the recent Shariat Court ruling on interest in Pakistan. Some pundits have pronounced that great harm will result from the banning of interest.1 Actually, such pronouncements are based on lack of understanding of both the modern economic system, as well as the nature of the Islamic prohibition of interest. As we hope to demonstrate below, the modern economy can function very well, indeed better in some ways,2 with a prohibition on interest rate payments as prescribed in the Shariah.

Date: 2001
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Working Paper: Interest and the Modern Economy (2000)
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