The three principles of Islamic finance explained

Author: | Published: 24 May 2005

This article was published in 2005. For a 2019 update from Al Tamimi & IFLR, click here.

For more Islamic finance news from IFLR, click here.

The principle that income can be derived from the time value of money (that is, by placing money at the disposal of another person and receiving an increased return at some stage in the future) has been a part of conventional financing for time immemorial. We know it as interest on loans and it has been as much part of our lives as earning a daily living.

Interest on a loan remains payable, irrespective of whether the cause or venture for which the money was advanced is successful or not. It means that a person can make money out of the mere fact that they have money and another has not. Some may say that there is an inherent injustice in a system where money is seen as...