Feasibility of the interest-free economic system Online publication date: Wed, 22-Apr-2015
by Jamal Abu-Rashed, Abdelhafid Belarbi
International Journal of Economics and Business Research (IJEBR), Vol. 3, No. 3, 2011
Abstract: Today's advancement of research in the field of contract theory along with debt vs. equity financing have set a new framework for treating the issue of interest charges. Most recently, Islamic financial institutions are increasing rapidly across countries of the Middle-East and North Africa. The Gulf States have created a new platform for sharia-compliant hedge funds that attracted names such as BlackRock and other key global mutual funds. Major US and European law firms and financial institutions have been reacting positively and promptly to take advantage of the liquidity and other investment opportunities in the region. The British government is also edging towards issuing a short-term sovereign sukuk (sharia-compliance bond). France along with other European countries have begun its own strategy aimed at Islamic investors. This paper presents a historical overview of the controversial issue of charging a fixed interest and discusses the feasibility of the new free-interest economic system.
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