Unsustainability of the regime of interest-based debt financing
Joint Authors
Mirakhor, Abbas
Shawkat, Mughees
Krichene, Nur al-Din
Source
ISRA International Journal of Islamic Finance
Issue
Vol. 4, Issue 2 (31 Dec. 2012), pp.25-52, 28 p.
Publisher
International Shari'ah Research Academy for Islamic Finance
Publication Date
2012-12-31
Country of Publication
Malaysia
No. of Pages
28
Main Subjects
Financial and Accounting Sciences
Religion
Islamic Studies
Topics
- Islamic jurisprudence
- Financial crises
- Economics
- International economics
- Economic development
- Productivity
- Inflation(Finance)
- Gross national product
- Financing
- Exchange rates
- Debts
- Risk management
- Interest rates
- Usury
- Profit-sharing
Abstract EN
Evidence has been mounting that the interest-based debt financing regime is under increasing distress.
Evidence also suggests that financial crises—despite the various labels assigned to them : exchange rate crisis or banking crisis—have been debt crises in essence.
At present, data suggest that the debt-to-GDP ratio of the richest members of the G-20 is expected to reach the 120 % mark by 2014.
There is also evidence that, out of securities worth US$ 200 trillion in the global economy, no less than three-fourths represent interest-based debt.
It is difficult to see how this massive debt volume can be validated by the underlying productive capacity of the global economy.
This picture becomes more alarming considering the anemic state of global economic growth.
There is great uncertainty with regard to interest rates.
Although policy-driven interest rates are near zero, there is no assurance that they will not rise as the risk and inflation premiums become significant.
Hence, a more serious financial crisis may be in the offing and a general collapse of asset prices may occur.
This paper argues that the survival of the interestbased debt regime is becoming less tenable, as is the process of financialization that has accompanied the growth of global finance over the last four decades.
It further argues that Islamic finance, with its core characteristic of risk sharing, may well be a viable alternative to the present interest-based debt financing regime.
American Psychological Association (APA)
Mirakhor, Abbas& Krichene, Nur al-Din& Shawkat, Mughees. 2012. Unsustainability of the regime of interest-based debt financing. ISRA International Journal of Islamic Finance،Vol. 4, no. 2, pp.25-52.
https://search.emarefa.net/detail/BIM-717790
Modern Language Association (MLA)
Mirakhor, Abbas…[et al.]. Unsustainability of the regime of interest-based debt financing. ISRA International Journal of Islamic Finance Vol. 4, no. 2 (Dec. 2012), pp.25-52.
https://search.emarefa.net/detail/BIM-717790
American Medical Association (AMA)
Mirakhor, Abbas& Krichene, Nur al-Din& Shawkat, Mughees. Unsustainability of the regime of interest-based debt financing. ISRA International Journal of Islamic Finance. 2012. Vol. 4, no. 2, pp.25-52.
https://search.emarefa.net/detail/BIM-717790
Data Type
Journal Articles
Language
English
Notes
Includes bibliographical references : p. 51-52
Record ID
BIM-717790