Riba (Usury) and interest and islamic finance: a historical review

Abstract

This paper examines the concept of Riba in Islam in historical context and explains why Riba is not synonymous with the concept of interest as applied to fmancial transactions in historical times. It asserts that not only Islam but Judaism and Christianity also dwelled on the issue of usury (Riba) and interest in the past centuries, and derived their own conclusions. The study shows that today's Islamic Banking and Finance is different than the traditional fmancial institutions in names only, the practices are similar in nature and scope as these have yet established Shari'ah consistent practices, although these banks had borrowed mostly the conventional banking products, and made them compliant with Shari'ah.