(A14) Religiously motivated investment: from the prohibition of interest to Islamic Finance

Whereas the canonical prohibition of interest has been overcome in Western economies for several centuries, the Koranic prohibition of interest (riba prohibition) is increasingly playing a role not only in Arab countries. In the past 30 to 40 years, an independent sector has developed within global banking: the so-called Islamic Banking or Islamic Finance, offering financial products that are consistent with shari’ah and aimed at avoiding the payment of interest. This may be achieved by performance-based profit-sharing or by generating payments of fixed profits that try to sidestep the prohibition of interest.

The sub-project pursues a twofold approach. On the one hand, the patterns of argument with which prohibitions of interest are justified will be compared across different eras and cultures. The comparison will also cover related forms of circumventing and implementing prohibitions of interest in this first pillar of the project. In the second pillar, on the other hand, legal issues of Islamic Finance will be dealt with from the perspective of comparative law.