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Time Criterion in Islamic Finance: Analytical study in the light of Al-Zarqa's rule of Shariah debts معيار الأجل في التمويل الإسلامي دراسة تحليلية في ضوء قاعدة الزرقا للمداينات الشرعية

Author

Listed:
  • Sami Ibrahim Al-Suwailem

    (Acting Director General of the Islamic Development Bank Institute Islamic Development Bank Group Jeddah-Saudi Arabia)

Abstract
This article presents the "Time Criterion" for identifying usury-based lending or ribā from trade and relates it to the concepts in economic theory. This criterion implies that the cost of financing cannot exceed the exchange value or utility if both parties were spot. Since the two parties are identical in a loan, the spot exchange will have no economic value; if Time is introduced, the cost of financing must be less than or equal to zero, which is a qard hasan or benevolent loan. The article also presents a mathematical formulation of the criterion which will demonstrate the acceptable range of the cost of financing, in case of an exchange, for both the creditor and the debtor. This formulation shows how Zarqa Rule can integrate with economic theory concepts to produce a unified criterion. The article then explores new dimensions of the relationship between "potential" and "actual" wealth, the role of debt or leverage in this relationship, and its impact on inflation under current circumstances. تستعرض الورقة معيار الأجل للتمييز بين البيع والربا مع ربط ذلك بمفاهيم النظرية الاقتصادية. ويقتضي المعيار أن تكلفة التمويل يجب ألا تتجاوز القيمة المضافة (أو المنفعة) الناتجة من المبادلة لو كانت حاضرة البدلين. وحيث إن القرض هو مبادلة الشيء بمثله، وهي لا تولد أي منفعة في حضور البدلين، فإن تكلفة التمويل في هذه الحالة (أي حالة القرض) يجب أن تكون صفرًا، وهذا هو القرض الحسن. كما تقدم الورقة صياغة رياضية للمعيار يتحدد في ضوئها النطاق المقبول لتكلفة التمويل في البيع من وجهة نظر الدائن والمدين، وبذلك يمكن دمج مقولات النظرية الاقتصادية بقاعدة الزرقا للخروج بمعيار موحد. كما تستكشف الورقة أبعادًا جديدة حول العلاقة بين "الثروة الكامنة" والثروة الفعلية" وموقع الديون من هذه العلاقة، وأثر ذلك على التضخم في ظل التطورات الاقتصادية الراهنة.

Suggested Citation

  • Sami Ibrahim Al-Suwailem, 2022. "Time Criterion in Islamic Finance: Analytical study in the light of Al-Zarqa's rule of Shariah debts معيار الأجل في التمويل الإسلامي دراسة تحليلية في ضوء قاعدة الزرقا للمداينات الشرعية," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 35(3), pages 51-62, January.
    • Handle: RePEc:abd:kauiea:v:35:y:2022:i:3:no:3:p:51-62
    DOI: 10.4197/Islec.35-3.3
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    More about this item

    Keywords

    Ribā; trade; cost of financing; intertemporal budget constraint الربا، البيع، تكلفة التمويل، قيد الميزانية الزمني;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other

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