Jurnal M. Rizwan

M.
Rizwan : Economics impact on prohibition of riba
ECONOMICS IMPACT ON PROHIBITION OF RIBA

M. Rizwan, B.Ec., M.Ec
Tel: +62 812-6770-4022
email: muhammadrizwan121189@gmail.com
ABSTRACT
Most prohibitions in Islam are easy to understand. The effect of

alcohol are abundantly clear with approximately 65% of all
weekend violent incidents being fuelled by alcohol. Similarly, the
ills of gambling are clear. However when it comes to interest, few
Muslims can fully comprehend the evils of this vice, and thus the
prohibition on interest does not appear to resonate with us as
seriously as it should. The prohibition of Riba (usury) in Islam is
one of the crucial factors that Islamic banking comes into
existence. Interest earned from deposits or charged to a loan is not
permissible under the shariah law. Any transaction that has the
element of Riba (usury) is against the teaching of Islam. The
objective of the study is to observe how Riba (usury) being treated
in Islamic views and non-Islamic views, connecting with
Economics Crisis 1997-1998 and debt disaster in developing
countries, and also wisdom on Ribas prohibit. The study uses a
qualitative methodology with approach of library research. The
result indicated the importance of the Ribas prohibit with
evidence showed Riba have negative impact in economic matters
and affect the people welfare.
Key Words: Riba, Islamic Views, Economics, Welfare
1. Introduction
The prohibition of Riba (usury) in Islam is one of the crucial
factors that Islamic banking comes into existence. Interest earned
from deposits or charged to a loan is not permissible under the
shariah law. Any transaction that has the element of Riba (usury)
is against the teaching of Islam. Interest in whatever form is
considered haram (not permissible) or in other word making money
Khazanah Ulum Perbankan Syariah, Vol. 1 No. 2, Juli - Desember 2016 51

M. Rizwan : Economics impact on prohibition of riba
from money is not acceptable under Islam (Ahmad, M., 2004).

Money used to gain extra money without effort or labour is haram
and if pursued it is as if waging war against God and His Prophet
(Ariff, M. 1988). Khan (1986) further supported why Riba is not
allowed due to its negative distributive justice and equity effects.
Islam promotes socio-economic justice, fair and equitable treatment
to everybody irrespective of their social standing. Riba does not
care this concern and is more in exploitation modes especially to
the poor debtor by the rich creditor (Gamal. 2000). This unfairness
clearly states why Riba is undesirable in the society either they are
Muslim or not. If Riba is allowed widely the social imbalances will
greatly impair every poor nation effort to eradicate poverty and as
we can see that most of the poor nations are at the mercy of the
richer nations.
Money in itself is a mode to store value and act as a medium

of exchange. When it is used as a commodity to create more money
that is where it is prohibited. This is because the only way that
money can make money is through interest earned or charged. This
is what in the modern banking of fixed deposit with fixed return of
interest rates given by banks or if loan are given a higher interest
rates are chargeable. The passive return of money is prohibited as
they are not employed as part of capital in the economic sense of it.
This is where the Islamic bank plays its role in ensuring that money
supplied by depositors are treated as investment and return/profit
are given to the funds supplier based on the return on investment
made by the bank (Tannenbaum, 1998). That is why most of the
investment deposit made by depositors in Islamic bank does not
provide a fixed return contract but rather indications of how much
the return will like be received at the end of the maturity date.
In many other religion, usury are scorned (Judaism), criminal

offence (Christianity-Eight century under Charlemagne and when
traced back to the ancient western philosopher condemned it
(Visser and McIntosh, 1998). So this was clearly that none of the
major religion in the world ever supported usury which was
52 Khazanah Ulum Perbankan Syariah, Vol. 1 No. 2, Juli - Desember 2016
basically known to create more harm than good. This is not a

modern day phenomena but has already experience by our
ancestors back then. The only thing was that they did not create any
credible alternative in order to avoid usury. The emergence of the
Islamic banking has provided the much needed answers not only
for the Muslim population but also for those who are looking for a
more ethical and promotes social justice treatment to the society.
2. The definition and understanding of Riba from Views of

Religion
2.1. The definition and understanding of Riba from Islamic
View
By literal, usury mean additional (al-ziyadah) 1 . Whereas
according to term; Imam Ibnu al-'Arabiy define usury with; all
supplements that not is participated with the existence of
compensation exchange 2 . Imam Suyuthiy in Tafsir Jalalain state
that, usury would be additional that imposed in mu'amalah, money,
or food, nice in rate though the time. 3 Inside the Book of al-
Mabsuuth, Imam Sarkhasiy states that usury is al-fadllu al-khaaliy
'an al-'iwadl al-masyruuth fi albai' (advantage or additional that not
is participated compensation that required in trade). In trade that
legitimate to occur and change between property with property.
Whereas if in trade is additional (advantage) that not is

participated compensation, so the case contrary to matter which
became consequence a trade, and the similar case illegal according
to Islamic law. 4 In the Book of al-Jauharah al-Naiyyirah,
1
Imam Thabariy, Tafsir al-Thabariy, juz 6, pg. 7; Ibnu al-Arabiy, Ahkaam al-
Quraan,juz 1, pg. 320; Mohammad Ali As-Saayis, Tafsiir Ayaat al-Ahkaam, juz
1, pg. 16; Subulus Salam, juz 3, 16; al-Mabsuuth, juz 14, pg. 461; Abu Ishaq,
Al-Mubadda, juz 4, pg. 127; al-Inayah Syarh al-Hidayah, juz 9, pg. 291; al-
Jauharah al-Nayyiirah, juz 2, pg. 298; Mughniy al-Muhtaaj ila Syarh al-Faadz
al-Minhaaj, juz 6, pg. 309
2
Imam Ibnu al-Arabiy, Ahkaam al-Quran, juz 1, pg. 321
3
Imam Suyuthiy, Tafsir Jalalain, surat al-Baqarah:275
4
al-Mabsuuth, juz 14, hal. 461; Fath al-Qadiir,juz 15, pg. 289
mentioned; according to Islamic law, usury is vanity treaty with

certain property, same only what in him there is additional though
not. See, you understand that trade dirham with dirham which the
payment adjourned is usury; and in him do not have additional5.
In the Book of Nihayat al-Muhtaaj ila Syarh al-Minhaj,

mentioned; according to Islamic law, usury is 'aqd' ala 'iwadl
makhshuush ghairu ma'luum al-tamaatsul fi mi'yaar alsyar' haalat
al-'aqd au ma ta `khiir feeal-badalain au ahadihimaa" (treaty on a
certain compensation that unknown the suitability in Islamic law
measurement, the good during treaty the take place or when there is
postponement one of the items that switched)6.
In the Book of Hasyiyyah al-Bajairamiy 'ala al-Khathiib

mentioned; according to Islamic law, usury is 'aqd 'ala' iwadl
makhshuush ghairu ma'luum al-tamaatsul fi mi'yaar al-syar 'haalat
al-'aqd au ma ta `khiir fee al-badalainau ahadihimaa'' (treaty on a
certain compensation that unknown the suitability in Islamic law
measurement, good during treaty the take place or when there is
postponement one of the items that switched, or secondly).
All scholars agree on usury illegality, good that gleaned a

little though or many. A person cannot control interest wealth and
the property should be reverted to the owner, if the owner already
known, and it only deserve on the property tree only. Al-Quran and
Sunnah with intense had explained usury illegality in various form
and how shall many it gleaned.
Al-Quran has taken such a hard approach towards interest is

mainly because Islam stands for establishing a just and economic
system free from all kinds of exploitation (Chapra, 1985). Riba is
forbidden in al-Quran in four separate revelations. Each revelation
5
The Book of al-Jauharah al-Naiyyirah, juz 2, pg. 298
6
The Book of Nihayat al-Muhtaaj ila Syarh al-Minhaaj, juz 11, pg. 309; lihat
juga Asniy al-Mathaalib, juz 7, pg. 471
emphasizes in increasing severity the graveness of the sin of Riba.

The first revelation states:
That which you give as Riba to increase

the peoples wealth increases not with
God; but that which you give is charity,
seeking the goodwill of God, multiplies
manifold. (Surah al-Rum, verse 39)
This first verse promises a divine reward for providing charity

but does not clearly define the cause of forbidding Riba, neither
does it provide a clear definition of the term. It merely emphasizes
that Riba provides benefit to an individual instead of society as a
whole, as it only profits the wealthy. It has also been interpreted as
emphasizing the spiritual gain in Zakat.
The second verse below provides some clarity to the definition

of Riba. It shows a graduated increase in the prohibition by using a
stronger term take instead of give. It describes the practice of
the Jews in Medina who employed a similar restriction of interest,
as prohibited in the Book of Deuteronomy, but only among
themselves. Some jurists interpret this verse to imply that the usury
banned to the Jews & Muslims are the same and narrowing down
the prohibition of Riba, as the Jews did, is viewed unfavorably in al-
Quran.
And for their taking Riba, even though it

was forbidden for them, and their
wrongful appropriation of other peoples
property, We have prepared for those
among them who reject faith a grievous
punishment. (Surah al-Nisa, verse 161)
The third verse is also most often used to justify that the
prohibition of Riba only pertains to usury, or the doubling and
redoubling of the principal. There is disagreement on whether this
verse is meant to restrict the ban on Riba or merely to express the
increasing aspect of the principal. As expressed by Sayyid Qutb, the

multiplying effect is no more than a description of the state of
affairs and not a condition relevant to the imposition.
O believers, take not doubled and

redoubled Riba7, and fear God so that you
may prosper. Fear the fire which has been
prepared for those who reject faith, and
obey God and the Prophet so that you may
receive mercy. (Surah Al Imran, verses
130)
The verses above have some explanation, among other are :

The torture that heavily weighted and hard later in doomsday
for usurer and that allow it. Syaikh Abdurrahman As-Sa'di
said :
"Because they in the world looking for treasure with way
that base-maniacal, they would be tortured in nether world
and in doomsday, they will not wake
from graves unless such as people that get devil blow,
unconscious and mad. Thus, as suffering and consideration
because they levelled trade with usury." (Interpret from Al-
Karimur Rahman 1 / 244)
Riba does not bring blessed, in fact destroy the actor.

Although as big as whatever result that it achieve. Ibnu Katsir
said :
Allah tell that will dispel usury result, sometimes will be
extinguished all, or does not give blessed to him, or
unrewarding the property, even will disappear in the
world, and tortured in doomsday, like Allah order : Say :
Unequal that bad with that good although many that bad-
pretty your heart. (QS. Al-Maidah, verse 100). Ibnu Jarir
7
Usury here is Riba nasiah. According to most scholars that Riba nasi'ah the
forever illegal, although no doubled
said : Allah commandment that means Allah destroy

usury for example as of what said by Abdullah ibnu
Mas'ud, that usury even a lot gained him but will be ruined
(the blessed). (See at Interpret Ibnu Katsir 1 / 439)
Syaikh Abdurrahman As-Sa'di said :

Further Allah inform that will be crushed usury result,
and adding the alms people that give alms, but human
mind reverse, they calculated with the alms would
decrease the property, and with redouble, their property
would be increased. In fact if they think, indeed the
sustenance in Allah hand. (Interpret Al-Kalimur Rahman
1 / 245)
Priority give alms. Even a little, Allah SWT would be

increased and bringing up him. This sentence remind Muslim,
hopefully give alms a lot to the relative that poor people,
better off when free the relative debt that unable, then Allah
SWT will be replacing him, like hadith that being talked by
Abu Hurairah ra. That Prophet Muhammad SAW decree that:
Not wrong a person give alms with a date from good

yield, unless Allah will get him with His right hand, and
Allah preserve him like you preserve foal that small, until
become such as mountain or larger. (HR. Muslim in
Book of Zakat)
The debate on what constitutes Riba rages on due to the lack

of clear definition in Al-Quran. Other sources are used by judicial
scholars to understand and determine what constitutes Riba. Ibn
Qayyim categorized Riba into obvious (jalliyy) and concealed
(khafiyy). The obvious Riba pertains to Riba in loans (Riba al-
nasiah) and the concealed to Riba of excess or Riba of barter (Riba
al-fadl). The Riba of barter (Riba al-fadl) is prohibited from the
statement attributed to the Prophet Muhammad SAW:
Sell gold with gold, silver with silver, wheat with wheat,
barley with barley, date with date, salt with salt, should
same the measure (weight or measure) and should face to
face. So anyone which exceeded or ask extra, indeed he
make usury, that take or that give, same the law. (HR.
Muslim in book Al-Masaqat, Tirmidzi, Nasa'i, Abu Daud
and Ahmad)
The basic rules that guide the prohibition of Riba of barter

were derived from Hadith, a set of statements attributed to the
Prophet Muhammad. the four schools of Sunni jurisprudence
Hanafi, Maliki, Shafi and Hanbali agree that they are only some
examples of items that are prohibited. However, they disagree on
what other items are covered in the prohibition as they have
dissenting opinions on the underlying reasons for the prohibition.
The Hanafi approach was the broadest, stating that any item
sold by weight or volume was subject to the rules of Riba in barter.
The Shafis, only applied this prohibition to metals like gold or
silver, and included all kinds of food to the prohibition. The
Malikis provided the narrowest interpretation by limiting the
scope of metals to gold and silver. With respect to food, they
limited the scope to non-perishable staple food items. The
Hanbalis position is less clear, but it is generally understood that
they follow the same view as the Hanafis.
While during the time of the Prophet Muhammad, barter

transactions were a prevalent aspect of the economy; it is not in
todays commercial transactions. The significance of this debate
lies in the treatment of money as a commodity. Majority of the
Muslim scholars agree that treating currencies as a commodity is
prohibited. Gold and silver were used as the basis of exchange for
value during that time and currencies are used in modern financial
transactions for the same reason.

Ibn Qayyim, a well known Hanbali jurist explains that

currency needs to be fixed and regulated to value artifacts sold
accurately. If currencies were to fluctuate in prices like normal
commodities, then financial transactions would be impaired. The
risk of commoditization of a currency encourages speculative
transactions that are unrelated to commerce and leads to the
destabilization of productive sectors of the economy.
Finally, the Riba in loans or the Riba in delay is (Riba al-

nasiah) defined as a contractual increase or benefit, whether or not
it is monetary, on loaned capital. The word nasiah means to
postpone or defer. Under this definition of Riba, all forms of
interest are Riba. There is no differentiation between simple or
excessive interest. It also covers the pre-payment of loans as the
phrase without inflicting or receiving injustice is interpreted as
without increase or diminution (El-Gamal, 2001).
The Riba in delay also limits transactions covering the

trading of the six commodities, discussed in the Riba in barter, on a
deferred basis. While the Riba in barter does not prohibit the
trading of same genera of commodities as long as the counter-
values are equal and the delivery is immediate, the Riba in delay
prohibits the trading of the same commodities if the delivery is
deferred even if the counter-values are equal. While the four
schools agreed that the prohibition for deferred trade covered the
six commodities and agreed that it also covered other deferred
trades as well, they differed on the scope of the prohibition against
deferred trades.
For the Malikis, the prohibition against the six commodities

was because they were food items, and all deferred trades where
both the counter-values involved food was forbidden by the Riba
of delay. The Shafis applied the same theory to the deferred trade
of food. Both schoolsShafi & Malikiagreed that gold and
silver were subject to both the rules of Riba in barter and Riba in
delay as they served as pricing instruments. However, with respect
to commodities that were not subject to the rules of Riba in barter
and were not food items, the Malikis permitted deferred trades
unless:
1. The counter values were of the same kind

2. The counter values were not equivalent.
The Shafis, on the other hand, permitted all deferred trades

as long as the counter values were not food, and that particular
transaction would have been permitted under the rules of Riba in
barter. The only exception is the deferred exchange for gold and
silver, which were absolutely prohibited. The Hanafis prohibited
the deferred trading of all commodities sold by weight or volume,
unless one of the counter-values was gold, silver or copper or a
good not sold by weight or volume. In addition, deferred trades of
the same commodity were categorically prohibited even if the
counter values were equal. The Hanbalis follow similar views as
the Hanafis.
Thus, the Shafis took the narrowest view of the Riba of

delay as the rules of Riba of delay were not applicable to the trade
as long as the counter-values were not subject to the rules of Riba
in barter. The Hanafis & Hanbalis gave the broadest
interpretation to the principle, while the Malikis took a stand
between these two extremes. All the schools however, permitted
deferred trades if one of the two counter-values was gold, silver or
copper and the other counter value was food or any other
commodity. They also permitted the deferred trading of food or
other perishable goods for non-perishable items. As long as the
trade did not violate the formal rules of the Riba of delay or the
Riba of excess, then the jurists were unconcerned with the pricing
terms agreed on between the parties involved.
There are varying opinions on the applications of the

prohibition of Riba. Ibn Rushd explains that the controversial
nature of Riba is due to the drawing of analogy from the
prohibitions found in the Prophetic teachings. Applying the
doctrine of Riba to transactions other than those specified in the

texts is knows as the analogy of resemblance. This is regarded
by some jurists to be unconvincing as it is jurisprudentially weak
as compared to an analogy of principle. They reject majority of
the extension of the prohibitions. For Ibn Rushd, it was the
problematic nature of the analogies used by the Sunni schools of
law which created the substantially different interpretations of the
scope of the Riba prohibitions.
2.2. The definition and understanding of Riba from non-

Islamic View
Briefly may we say all religions prohibit usury activity.
Between oldest research on usury has been committed by a Greek
philosopher, Aristotle, in the book on politics. He think usury is
false profit that not amounting into finance group received by truth.
Used money as medium that can be traded is a scam business.
Money should become trade tool and also as value to measure price
of goods. Therefore used money as product to be is traded are
overrun original objective limit money.
Riba also banned strictly her in book that devolves upon

Prophet Musa A.S. Mentioned in verse 22 in chapter on 'Bani Israel
race's refugee from Egypt : If you lend money to My People
which poor do not you become as creditor (which imposed usury)
and do not you fix interest rate from that debtor.
In the book of Deuteromony (Second of Book) that devolves

upon Prophet Musa A.S. in verse 23 : Do not you lend by
imposing interest to your relative, interest (usury) on money,
interest (usury) on food materials or need, interest (usury) on what
item that seconded interest (usury).
Interest ban exist since Christian religion beginning until to

movement time Christian renewal of religion that make up sects
schismatic from Pope patronage in Roma. All denominations in
Christian religion ban interest. Luther (Protestant religion founder)
that is specially strong the opinion on interest ban had inscribed
thesis on business and usury. In the writer Luther has outlawed

many trade form which is known as inside Islamic fiqh as sell
stock. After examining doctrine from Christian and Jewish,
decrement look from social master which differ, and Islamic
doctrine now, is a point to join with all resources.
Reason why all god's religion, specifically Islam, give

statement on Riba was that basic teachings from all religion is
expand human equivalence, harmony, and convenience to all
humanity. All religions fight against shaped economic system
social exploitation human, and want expand a society or system
which aims to unity justice economic-social that wide and peace of
the human race.
3. Economics Crisis 1997-1998 and Impact from Debt

Disaster in the Developing Countries
Economy in region East Asia since thirty years ago more
illustrious with agriculture-based economy. The population so
diligent work out their land to generate item that exported overseas.
A little they increase wealth with high savings rate, economic
management that moderately good which produces inflation rate
and low interest, national budget that balanced and growth rate that
sufficiently high. Wealth which increased the used to increase
education and human resource training to change economic
structure from agriculture to industrial. Almost every regional
countries had showed pace of development that very fast until
wowing West powers.
Economic recession have occurred several times since fifty

years ago. Practically every ten years happen economic recession.
For example, in year 1965 recessions had occurred during Malaysia
and Singapore begin using currency that separate. At that time lots
of people who believe that between recession reason happened was
about currency usage that separate to Malaysia and Singapore.

In year 1973, again we experience recession that are quite

slightly worse from recession in year 1965. This Kali, between the
reason is increase of price of petrol that due to OPEC's countries to
seek price that reasonable for their nation's palm oil. Ludicrously
her at that time, national economy experience recession although in
inflation situation that high. So economists have inaugurated theory
and new term namely "stagflation" or "stagflation".
In year 1985 on the other hand, again world have undergone

recession that caused by some matter including war between Iraq
and Iran. At that time almost world-wide feeling effect that great
that have never been tasted since "depression" in year 1929-1932.
In year 1985, Malaysia, Indonesia and Singapore have undergone
negative growth rate, that have never been tasted before that.
Recession in this time also greater from recession in year 1973.
Although that , because this resilience of the country's economy
region, recession can outdone in brief periods and in year 1986-87,
economy reviving.
Recession which started in year 1997 also no longer called

recession but crisis because apparently it greater from recession in
year 1985-6.Economic crisis in this time not only greater but faster
happening until not manage to any countries too to sustain. Main
thing which sparked this crisis no other and not are because home
currency sale East Asia in bulk that too many by giant international
fund manager. Although it have been triggered by home currency
sale East Asia on a large scale just now, actually got a few different
reason which enables the matter carried out.
The highly depressing mess caused by debt an interest in the

developing countries is today evident for all to see. Countries spend
up to 40 - 50% of their GDP funding debt interest payment to
Private Western Banks, or the IMF/World Bank syndicate. Quite
often debt payments contribute a larger proportion of GDP than that
spent on Education, Healthcare and infrastructure combined. The
enslaving of the developed world by no means ended with the
withdrawal of colonial powers, but debt has shackled the futures of

generations in these countries. But how did it ever get this bad ?
well, lets start at the Bretton Woods agreement where 2 global
institution were born with noble aims, at least on the face on it.
The institutions in question were the World Bank & the IMF
(International Monetary Fund). In the 1944, the IMF & World Bank
were developed. The objective of the World Bank being to provide
developmental assistance for non-commercial projects and the IMF
was to assist nations in short-term balance of payments difficulties
and to ensure stability.
In 1987, the Institute for African Alternatives (IAA) called for

the dissolving of the IMF & The World Bank, largely on the
grounds that they had done more harm than good to the developing
world. What happened in the years between 1944 & 1987 has been
the subject of scores of critical academic study. Here are a few key
statistics which have been developed on the back of extraordinary
empirical research.
In 1989, The World Bank conducted a review of its policies and
was unable to point to one single project which had improved
the lives of the citizens in the country in question.
No country has ever paid off debt taken from the World Bank or
private Banks
The Debt imposed by the World Bank is not on the heads of
individual leaders, but rather the responsibility of the people in
the sovereign state. This way round there is no escaping the
reckless action of a bad dictator.
For many developing countries, debt interest often constitute a
greater % of GDP than Education, Healthcare and infrastructure
combined.
Debtor countries started off 1990s 61% deeper in debt than
1980s
During 1982-90, developing countries paid 1.3 billion in
Interest & Capital to creditor countries.
Largest faith group in 3rd World are Islam
The situation is now so bad in the developing countries that as

the above statistic shows, the repayment of debt interest now
constitutes a greater percentage of GDP for most countries than key
expenditure such as healthcare and education. Of course, the most
depressing statistic of all is the largest faith group in the developing
countries are Islam. Now that we have gained a thorough
understanding of the nature of debt-finance and the international
catastrophes it is responsible for, we can move on to understand the
Islamic solution to progressing an economy, without using debt.
4. The Wisdom Behind The Ban on Interest (Riba)

Whenever Allah SWT reveals a law unto humanity, it quite
often exhibits mercy for humanity. Indeed the Prophet Muhammad
SAW has been described as a mercy of the whole of mankind. Now
mankind is at times trapped into a cause and effect understanding
of the world e.g. walking into the middle of the road when traffic is
full flow may be injurious and even fatal, hence waits till the traffic
has cleared before crossing.
Whilst this mindset has advantages, it is limited to the level of

intellect possessed by man. Indeed if a situation presents itself
which is harmful to man, but as yet he does not possess the
requisite knowledge to know, (except for a cautious few) he will
probably proceed with the action. An example of this could be
smoking prior to the direct link to cancer being proved. Hence, as
man is limited in his intellect, and Allah has no limitations, the
wisdom behind others may be somewhat more difficult to grasped.
Allah SWT has no explicitly stated the wisdom behind the

ban on interest, and as such mankind can only speculate as to the
real reason behind this ban. However, one point must be made clear
the ban is absolute and covers all possibilities (unless the doctrine
of necessity genuinely applies), and is not contingent upon

mankinds understanding of the wisdom behind it. Naturally then as

Muslims, we unreservedly accept the divine prohibition on interest.
After that though, we can speculate on the reasoning behind this
ban.
Many international economists and financial experts for

decades and centuries have documented the ill on interest. Though
the subject of the externality posed by interest to an economy an on
society in general is a subject worthy, we can see a few key and
facts which should convince any neutral reader on the problems
caused by interest.
In our daily routine find out interest practice banned since

olden days yet. Ban basis is this interest practice do not follow ethic
and theology. Usury problem terrible indeed and more serious the
problem from economic issue itself. Essence to interest ban is
guarantee to get something than something that no (something out
of nothing) something that breached natural incident rule that
certainly will make and give imbalance effect and destruction.
Any difficulty in trade business and business sidelined for

take care of interest and public welfare. This which many wrongly
understood that for facilitate a few people that require something,
so simplified or generated charging system base on usury
immediately damage trade whole system general society.
This does not mean do not have direct transaction which

involves usury. In beginning time tamaddun Jewish, Jewish's
persons that cursed Allah has ostensibly granted to carry out usury
but have particular condition and said condition is so that usury not
imposed among Jew. In Chapter 23 sentences 20 books
Deuteronomy state, Unto a stranger thou mayest lend upon usury,
boot unto thy brother thou shalt note lend upon usury. This
statement ostensibly which enables Jew hit and take usury from
others apart from own Jew. In fact strange word-in this text
generally are intended Jewish enemy. Who not Jewish enemy?
Armed with this text Jew use usury as weapon, and make him road
to master enemy. This clear proof what said by Tun Dr. Mahathir
Muhamad that Jewish rule the world through proxy. With other
needs of people can be conjured into their business.
5. Conclusion
Islamic Finance is deeply rooted in religion. The precept
under which it operates is guided by the religious prohibition of
riba and other Islamic teachings. While the prohibition of interest is
not unique to Islam, it has been all but eradicated in other major
religions. Capitalism is currently the dominating economic concept.
In order for Islamic finance not follow the same route, it is

imperative to understand not just the religious reasoning for this
prohibition but the social, corporate and economic implications as
well. From a social perspective, the use of debt and consequently
interest as a tool to smooth consumption has led to higher personal
bankruptcies, and the dependence on predatory lending practices
that lower instead of improving the social welfare of individuals.
Usury state laws have not successfully protected individuals from
the evils of usury. In contrast, Islam promotes the redistribution of
wealth through Zakat. It encourages each member of the
community to contribute towards the welfare of its members
eliminating the need to resort to debt, avoiding its negative effects.
Zakat is no doubt plagued by issues pertaining efficient collection
and administration, but the potential is enormous. Thus, it is
imperative that current issues be addressed to realize its capability
to promote social welfare.
Prohibition of Riba is the most distinctive feature and

probably the most intensively discussed issue of Islamic
economics, yet it remains a major topic for further probing and
research.

The principal reason why religions have delivered such a

harsh verdict against riba or interest is that all religions wish to
establish an economic system where all kinds of injustice are
eliminated and all forms of exploitation are controlled. All divine
religions, especially Islam, particularly do not allow the injustice
perpetuated in the form of financer being assured of a positive
return without doing any work or sharing in the risk, while the
entrepreneur, in spite of his management and hard work, is not
assured of any return. Islam wishes to establish justice between the
money holder and the entrepreneur. Al-Quran in prohibition of
riba aims at eliminating exploitation, oppression, and inequality. It
is therefore, obvious that there is enough justification for
prohibition of interest, which suits to human mind, and looks an
unbiased mind after freeing from pre-convinced notations. The
reality however, remains stand firmly that prohibition of riba is not
based on economic point of view only, it has been ordained by
Almighty Creator in all His Wisdom as an act of justice. In
prohibiting riba, and permitting profit and loss, Islam has
developed several means of financing.
In an attempt to highlight a few of the issues involved in the

debate surrounding the prohibition of riba, we have given a brief
overview of the prohibition of riba. We have attempted to
demonstrate the phenomenon of riba and its effects upon
production in creating wide discrepancies between the supply of
money and the supply of real goods as a result of using money as a
production good yielding daily profit rather than a medium of
exchange and a measure of value. This creates an imbalance of the
monetary system since money cannot become the object of
profitable trade without severe trade-offs.. Over nine hundred years
ago, Imam al-Ghazzali, elucidated and predicted the results of such
irregular trade:
Riba is prohibited because it prevents people from

undertaking real economic activities. This is because when a
person having money is allowed to earn more money on the
basis of interest, either in spot or in deferred transactions, it

becomes easy for him to earn without bothering himself to take
pains in real economic activities. This leads to hampering the
real interests of the humanity, because the interests of the
humanity cannot be safeguarded without real trade skills,
industry and construction.
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Rizwan : Economics impact on prohibition of riba

ECONOMICS IMPACT ON PROHIBITION OF RIBA

Most prohibitions in Islam are easy to understand. The effect of

Khazanah Ulum Perbankan Syariah, Vol. 1 No. 2, Juli - Desember 2016 51

from money is not acceptable under Islam (Ahmad, M., 2004).

Money in itself is a mode to store value and act as a medium

In many other religion, usury are scorned (Judaism), criminal

basically known to create more harm than good. This is not a

2. The definition and understanding of Riba from Views of

Whereas if in trade is additional (advantage) that not is

mentioned; according to Islamic law, usury is vanity treaty with

In the Book of Nihayat al-Muhtaaj ila Syarh al-Minhaj,

In the Book of Hasyiyyah al-Bajairamiy 'ala al-Khathiib

All scholars agree on usury illegality, good that gleaned a

Al-Quran has taken such a hard approach towards interest is

emphasizes in increasing severity the graveness of the sin of Riba.

That which you give as Riba to increase

This first verse promises a divine reward for providing charity

The second verse below provides some clarity to the definition

And for their taking Riba, even though it

increasing aspect of the principal. As expressed by Sayyid Qutb, the

O believers, take not doubled and

The verses above have some explanation, among other are :

Riba does not bring blessed, in fact destroy the actor.

said : Allah commandment that means Allah destroy

Syaikh Abdurrahman As-Sa'di said :

Priority give alms. Even a little, Allah SWT would be

Not wrong a person give alms with a date from good

The debate on what constitutes Riba rages on due to the lack

The basic rules that guide the prohibition of Riba of barter

While during the time of the Prophet Muhammad, barter

58 Khazanah Ulum Perbankan Syariah, Vol. 1 No. 2, Juli - Desember 2016

Ibn Qayyim, a well known Hanbali jurist explains that

Finally, the Riba in loans or the Riba in delay is (Riba al-

The Riba in delay also limits transactions covering the

For the Malikis, the prohibition against the six commodities

1. The counter values were of the same kind

The Shafis, on the other hand, permitted all deferred trades

Thus, the Shafis took the narrowest view of the Riba of

There are varying opinions on the applications of the

doctrine of Riba to transactions other than those specified in the

2.2. The definition and understanding of Riba from non-

Riba also banned strictly her in book that devolves upon

In the book of Deuteromony (Second of Book) that devolves

Interest ban exist since Christian religion beginning until to

thesis on business and usury. In the writer Luther has outlawed

Reason why all god's religion, specifically Islam, give

3. Economics Crisis 1997-1998 and Impact from Debt

Economic recession have occurred several times since fifty

62 Khazanah Ulum Perbankan Syariah, Vol. 1 No. 2, Juli - Desember 2016

In year 1973, again we experience recession that are quite

In year 1985 on the other hand, again world have undergone

Recession which started in year 1997 also no longer called

The highly depressing mess caused by debt an interest in the

withdrawal of colonial powers, but debt has shackled the futures of

In 1987, the Institute for African Alternatives (IAA) called for

Largest faith group in 3rd World are Islam

The situation is now so bad in the developing countries that as

4. The Wisdom Behind The Ban on Interest (Riba)

Whilst this mindset has advantages, it is limited to the level of

Allah SWT has no explicitly stated the wisdom behind the

Khazanah Ulum Perbankan Syariah, Vol. 1 No. 2, Juli - Desember 2016 65