The Riba Conundrum: The Ethical Appeal of Islamic Banking

The rule of Islam is simple: if you advance a loan, you are entitled to receive your capital only and nothing more. If you wish to secure profit you should enter into a partnership and become a shareholder. Prohibitions against interest are not peculiar to Islam. If we were to trace back through history, a number of examples of such prohibitions can be found in the early Greek, Roman and Rabinnical thought. As a consequence of the decline of the influence of the Catholic Church and the Jewish aphorism that the taking of interest from gentiles is a commendable practice, laws were subsequently drafted for legalizing interest transactions. As a result, industrial, financial and commercial power become concentrated in the hands of giant Western corporations and a worldwide dominance of capitalist imperialism followed. This practice has created widespread acceptance of the practice of charging interest (usury) and has dominated Western law and ethics for over a millennium. But, the Western or capitalist economic system has proven a failure in its quest for economic justice, which serves to benefit all in society, both the rich and the poor. In particular, capitalism is currently causing a terrifying scenario of making the rich richer and the poor poorer due to interest charges. The fundamental motivation for the paper is to examine whether an alternative banking or economic system could contribute in alleviating the global financial crisis we face. This alternative banking model is to rest on social justice. It is necessary to reassert that this banking system is based on the avoidance of all forms of financial exploitation and on having as its principal object the combined purpose of the creation of wealth and the alleviation of poverty.


Objectives of this research
The research attempts to get to the core of the meaning of riba from religious and economic perspectives.It strives to attain a wider consensus on the meaning of riba among scholars and policymakers.
The research discusses the pertinent issues of riba that many blame for the global financial turmoil.
It postulates an alternative to a capitalist or riba-based economy.
The study purports to achieve a point where people can have the choice of a life without riba.

In Greek thought
Riba (usury), the original name for modern interest or a fixed return on investment was present in the early Greek, Roman and Rabbinical thought.
Riba is the practice of taking interest on interest, which was easily manipulated by adding the unpaid interest to E-mail: nico.swartz@mopipi.ub.bw the unpaid capital and using the sum as the base for the next interest payment.
1 This taking of riba (any interest or fixed return) was treated as an offence against morals.
2 In Greece, taking interest was a fact of life, while the legitimacy of interest taking was recognized throughout Greek history.It had, opposition.Until the 6 th century BC, insolvent debtors were obliged to place their bodies at the disposal of their creditors to work as slaves, sold in captivity, or even killed.
3 Plato and Aristotle condemned the practice of riba.The former saw money as barren and therefore outlawed profit on loans. 4The latter saw money as a necessary art, but he is of the opinion, that if it becomes the end of life, if it knows no bounds, and if it turns to unnatural practices to satisfy its excessive desires, then it is contrary to man's true good.Aristotle exerted that money was intended to be used in exchange, and not to increase at interest.

5
The usurer, because of greed, attempts to make a profit from what is naturally sterile and purely a medium of exchange. 6

Romans
In his Corpus Juris, Justinian (483-565 BC) forbade interest to rise higher than capital.

7
Theodosius has decreed in 386 BC that usurers should pay a penalty of fourfold the amount of illegal interest that they had taken.

8
In 347 BC, in Rome, a law reduced the interest rate: "… the rate of interest was cut in half (semiunciarum tantum ex unciario fenus factum).9 A similar law, the Lex Fluminia minus solvendi (271 BC) allowed borrowers to pay off their debts with money of reduced value, and the Lex Valeria allowed bankrupt debtors to satisfy their creditors by repaying one fourth of what they owed.The Romans began to adopt the long-standing Greek practice of one percent per month (12 percent a year) as the rate of interest on loans.This became the legal maximum in Rome in 51 BC.

13
The prohibition against usury was one of those laws which only concerned members of the Jewish community.Rabbi Simeon Ben Eleazar was of the opinion that this prohibition should extend to foreigners as well.He praises the person who lends without interest and condemns those who refuse to do so.In the same vein, the Tosephia to Baba Mezi'a notes the promise of a reward to those who lend freely.Philo (c. 30 BC to 45 AD) forbade anyone to lend money on interest to a brother or sister (anyone of the same citizenship or nation).He reflects that a free gift is in a sense a loan that will be repaid by the recipient when times are better, without compulsion and with a willing heart.He wrote in his De Virtutibus: "For along with the capital, in place of interest which they determine not to accept, they receive a further bonus of the fairest and most precious things that human life has to give: mercy, neighbourliness, charity, magnanimity, a good report and good fame." 14 Similarly, the Mekiliha on Exodus condemns everybody who takes part in usury.
15 Usury is at times made equivalent to denying God.The Gemara of the Babylonian Talmud quotes Rabbi Jose as saying: "Come and see the blindness of those who lend at interest […] So-and-so has denied the God of Israel.
In almost the same words, the Gemara of the Jerusalem Talmud labels interest taking as a denial of Yahweh.

16
In the text of the Jerusalem Talmud, usury is connected with idolatry, the most serious of sins. 17In the opinion of the rabbis, usury was also equivalent to the shedding of blood. 18The rabbis also equate usury to the selling of one's own daughter into slavery.The Gemara on Arakin records: "[…] a man should rather sell his daughter than borrow on usury." 19Considering usury (riba) equivalent to robbery, the rabbi excluded the moneylender from being a witness or a judge.

A deviation from religious viewsthe legalizing of interest transactions
The practice of usury and interest reappeared notwithstanding the fact that the charging of usury and interest was initially condemned (see previous paragraph) by the three major religious denominations.These religious denominations subsequently give way for an economic dimension in which the charging of interest or usury came to be accepted in contemporary moneylending transactions.Their views regarding Christianity may be based on the parable of the talents told by Christ to consider interest generated by deposits in banks not only normal practice but even a commendable one.

21
As a consequence, laws were drafted for legalizing interest transactions.Scholastic treatises allowed exceptions to the ban on usury by which a lender in a mutuum may receive some payment beyond the principal.
22 If one lends money to a merchant or anyone else, who makes profit out of it, it is argued, it cannot be unjust to draw a profit from it yourself.Human laws were therefore promulgated to permit usury, and its aim was to avoid interference with the "useful" activities of many persons.
23 For example, the Holy Office, allowed in 1830 AD, for interest to be lawfully taken for money lent to merchants who were in profitable trade.

24
Creditors were allowed to receive compensation from defaulted debtors on two grounds: If a debtor failed to pay a loan on the stipulated day, the creditor might suffer loss.In that case, the just price of the loan must include some compensation for the loss.This additional payment was called "interest."Interest might also be claimed if the lender lost an opportunity for making profit, because the debtor did not return the loan in time.The creditor could lawfully draw usury in the name of interest. 25For example, the poena detentori or mora imposed a penalty for late paymentafter the specified date of maturity of the loan.But it must be borne in mind that a tacit agreement to make late payment was usurious.(in fraudem usurarum).The second title was damnum emergensa compensation for damages or loss that the lender incurred after having made the loan: for example, from not having the money accessible in an emergencya fire or storm that destroyed his barns or livestock.A third title, was the lucrum cessans, the lender's opportunity cost in the form of interesse; this was viewed as licit difference between the principal and repayment of a loan.This title justifies the exaction of a return beyond the principal.The final title was the venditio sub dubioa device where a loan was cloaked in a sales contract which specified future payment.In this agreement the amount of a loan was disguised by augmenting the stipulated principal to be repaid by the amount of the required interest payment. 26For example, goods are received on a particular day and paid for at a later date.The creditor received a higher payment at the later date because the value of the goods sold had increased by the time of payment.The difference between the prices of the goods on the day of reception and at a future date was effective interest on the loan.Such contracts were open to abuse by the unscrupulous.Credit sales at much higher prices are to be considered usurious.

27
Another title, which shares the same sentiment of the above, was the theory of contractus trinus (triple contract), which made usury lawful in the name of interest. 28The contractus trinus was a legal trick used by European merchants in the Middle Ages to allow borrowing at usury.It was a combination of three contracts, which together yielded a fixed rate of return from the outset.For example, person A might invest $100 with person B for one year.A would then sell back to B the right to any profit over and above say $30, for a fee of $15 to be paid by B. Finally, A would insure her or himself against any loss of wealth by means of a third contract agreed upon with B at a cost to A of $5.The result of these three simultaneously agreed upon contracts was an interest payment of $10 on a loan of $100 made by A to B.

29
The justification for usury may run along the following lines: money lending involves an element of risk and an element of time.For the time during which the lender has extended the loan, he/she is unable to invest his or her money in alternative endowment schemes.Interest charges seem therefore to be the only outcome for the risk undertaken by the lender.

The Judaic question
As mentioned earlier, a deduction can be derived from the fact that the emergence of interest in the West was probably triggered by the Judaic permission of allowing the taking of interest from Gentiles.Abarbanel, who represents the first known Jewish attempt at an economic theory towards capitalism in the 12 th century says: "There is nothing unworthy about interest per se, because it is proper that people should make profit out of their money (wine and corn, and if someone wants money from someone else).Why should the borrower not give the lender a certain amount of interest?Why should a farmer, for instance, who received so much wheat to sow in his field, not give the lender 10 percent, if he is successful, as he usually would be?This is neither despicable nor contemptible.It is an ordinary business transaction and is correct.Nobody is under obligation to give his money away to somebody else, unless it be for the sake of charity […]" 30 On the basis of this assertion, it would be appropriate to give some compensation to the owner of the capital.

31
Even Canonists (who have opposed the taking of interest) agreed that one may pay up to 5 percent for lending money.Pope Alexander VI gave permission to the rulers of the state to allow the Jews to charge interest.

32
According to Calvin, interest is only forbidden in so far as it is opposed to equity and charity, otherwise nous sommes frėres, voire sans aucune.This formula would have eventually become the new spirit of capitalism.

33
This justification of the concept of usurious lending in Judaism and the relaxation against the prohibition of interest by Scholastici (western theologians) caused the dilemma of usury (riba).

CONSENSUS AMONG SCHOLARS ON THE MEANING OF USURY (RIBA) AND INTEREST
Usury (riba) is identified in a general sense as the taking of more than was lent.

Definition of usury
McLaughlin asserts that usura is derived from ab usu aera, usu aeris, usuera, usueri, usurea or usu rei.It means pecunia and usury therefore signifies not only money, but any kind of goods which man possesses.

35
McLaughlin cited Innocent IV, who is of the opinion that usury is gain owed or exacted from a contract of loan.

36
A more comprehensive definition, forwarded by Hostiensis reads that usury is whatever is in excess of the capital for the use of the thing lent when either there is an agreement or this intention present or even that which without either agreement or intention is exacted from the borrower.

Teaching of usury in the middle ages
Gratian has composed his Decretum (Decretum Gratianus) after 1140, which embodied all the ancient laws of the Church.In Distinctions XLVI and XLVII, of the Decretum, he forbids clerics to demand usury and stipulates that a perpetrator of this crime never be raised to orders.In the case where the perpetrator is already in orders, he can then be deposed.Gratian formulates a synopsis of usury in his Concordia Discordantium Canonum: "To demand, receive or even to lend and expecting to receive something above the capital is to be guilty of usury; usury may exist on money or anything else; one who receives usury is guilty of rapine and is just as culpable as a thief; the prohibition against usury holds for laymen as well as clerics but, when guilty, the latter will be more severely punished."38 Gratian inspires canonists and as a result they compile a document, the Corpus Juris Canonici.This document dated from the twelfth to the fourteenth centuries and touches on the question of usury.
39 At these periods, the Canonists were all concerned with the problems of usury, of banking, of contracts, and with all the aspects of the commercial life which has become an important fact of these times.40 According to McLaughlin, the Lateran Council of 1139 detested the avarice of usurers in both divine and human laws.He alleges further that the Council of Vienne of 1311-1312 asserted that the chief official in any community commits an offence against God, when he draw sup or causes to draw up statutes permitting usury to be charged.

41
To lend for usury is a mortal sin as is theft.

42
McLaughlin says Baldus mentions that there are three kinds of usury, namely quaedam sunt usurae punitoriae, quaedem recompensatoriae and quaedem lucratoriae.The first kind is allowed by divine and canon law to be demanded as interesse on account of delayed payment.The second kind is also permitted up to a certain amount following the custom of the place which requires compensation by way of permutation rather than by way of penalty.This kind of usury is based on equity, which 38 Concordia discordantium canonum.Dictum before C.14, q. 3, c. 1: "Quod autem praeter summam emolumenta sectari sit usuras; after c. 4: Ecce evidenter ostenditur quod quicquid ultra sortem exigitur usura est; before q. 4, c. 1: Quod vero nec clericis nec laicis liceat usuras exigere.Cf. also summaries of q. 3, c entails that by natural reason, one is to forbid to enrich himself at the expense of another.

43
The third kind is forbidden by divine law.

44
McLaughlin interprets these rules as to read that interesse is allowed on the loss which the creditor suffers and on the profit which the debtor has made. 45On the question, why interesse is allowed and usury forbidden, Baldus answers that the intention is different.He alleges that in the case of usury, the creditor intends to be a usurer, to demand something on account of the loan.On the other hand, in the case of interesse, the creditor receives something on account of the loss suffered or the gain which the debtor has made.

46
McLauglin contends that both parties stand to lose or gain in a loan at usury.According to him, the creditor may lose the capital itself.

47
The Decretum of Gratian condemns usury as the receiving of more than the sum lent, not only of money but of anything in kind, wheat, wine or oil. 48McLaughlin interprets the phrase on usury "… more than the sum lent," as any excess demanded, though it be a small gift.

49
He means whatever is added to the capital, no matter by what name 50 , and or whenever more is required that was given, 51 we have usury.The condemnation posed in the Decretum of Gratian alludes also to usury, for example, those who buy with the intention of selling at a higher price, who engage in any business for gain or who in any contract receive more than they give. 52According to McLaughlin, the following contracts may be usurious: If I lend you ten pounds and a poor horse worth five pounds for six months and demand twenty pounds.This contract is made to avoid the name of usury unless the horse was really worth than what has been added to the sum loaned.Another example, if I sell goods worth twenty pounds for thirty pounds to be paid at a certain date, I am guilty of usury unless there is doubt as to the approximate value of the goods.Also, if I buy and pay now for grain to be delivered at harvest time and the current price which I pay is much lower than that Swartz 2587 which will then be current, this contract may be usurious.

53
McLaughlin is also of the opinion that a penalty for the late payment of a loan may also result in usury transactions.

Consensus by scholars
According to McLaughlin, Canon law condemns as usury the taking of more than the principal even though the lender assumes the risk. 55The Corpus Juris Canonici states that if one expects to receive in return more than the amount of the loan, he is a usurer.56 Urban III regards someone as a usurer, who would not lend money unless he knew that he would receive more than the capital.He also regards one who refuses to grant an extension of time to one who is under oath to repay a debt on a certain day, a usurer.Both of these are guilty of the crime of usury on account of their intention.57 Pro-banking scholars believe the Medieval contention of the Scholastici is anachronistic for the modern day banking and finance system.They inclined to forge disjunction between interest and usury and forwarded three caveats in favour of the differentiation between usury (riba) and interest:

Riba means usury and as such interest, particularly bank interest, does not fall into the ambit of riba. Riba relates to loans contracted by the poor and the needy persons for consumption purposes, while interest constitutes reward on commercial,productive and profitable loans.
Interest stands for reasonable rate of return, while riba represents an excessive, exorbitant and exploitative rate of interest.These three features assert that interest is moderate, while riba is exorbitant and oppressive.In view of nominal interest, like bank interest, they opine that the latter may not be regarded as riba (usury).Along the line, the modern day scholar regard the term riba in Islam to cover only "excessive" interest.

58
This grouping is therefore of the opinion that not all forms of interest are riba (usury), whereas another group is of the opinion that riba (usury) covers all forms of interest and not only On the strength of the latter, Khurshid Ahmad (1994) submitted that the three premises are totally incorrect, theoretically inadmissible and empirically baseless.He reasons that there cannot be any economic or Shari'ah justification for confining riba to usury and excluding interest from its jurisdiction.He asserts that as far as economic analysis is concerned, there is no technical difference between interest and usury.He further avers that when we look upon the phenomenon from the demand side of economic analysis or the supply side, the rationale developed in economic theory for interest and usury is the same.If it is a reward for waiting, there cannot be any differentiation between interest and usury (riba).Khurshid Ahmad alleges, if the question is examined from the productivity approach, there cannot be any differentiation between the two.Whatever differentiation introduced in the literature comes on moral grounds stating that one is high and exorbitant (usury) and the other is low and as such reasonable; and secondly that usury deals with loans to the poor for consumption purposes, while interest deals with profitable commercial advances.According to Khurshid Ahmad, there is no economic substance in any of these excuses.

60
There is no difference between consumption loan or production loan; high rate or low rate loan taken by a poor or rich person.

61
In view of the perception(s) of Khurshid and the general definition furnished above, the research shows a penchant for the opinion that there is no technical difference between interest and usury.The research can now vouch that there is consensus among scholars that the term covers all forms of interest and not only "excessive" interest.

62
Since usury (riba) involves paying more than the value of money received, it offends against commutative justice in that it charges more than the value of the money lent, which is unjustified since money is barren and can produce nothing in and of itself.Usury (riba) therefore affects wealth transfer from the poor to the rich and is harmful to individuals and society.

Rationale for the prohibition of usury (riba)
The philosophical basis for the prohibition against usury (riba) dealt with the very nature of money itself.The Third Lateran Council, condemning usury in 1179, stated that 59  If the taking of usury was allowed many evils would follow.People would neglect the cultivation of their lands.This would cause famines and the poor would perish.Though they might have lands to till, they would not have the animals and implements necessary because they have not their own; and the rich would place their money out at usury where the profit is greater and more certain, rather than in agriculture where the gain is smaller and less certain.Food would be so expensive on account of its scarcity that the poor would be unable to purchase it.

65
The paying of usury perennially will reduce men to poverty and one who practices usury can hardly avoid falling into the sin of idolatry: "The heart of the avaricious is in his money."66 For this reason, usury is against charity and piety since we are obliged to love our neighbor and succor him in need.

67
No one could for long pay usury without being reduced to poverty.

68
The diversion or aberration of "money" from its basic function as a medium of exchange is the basis for the financial crisis.Money, is however, made as an object of trade, which transformed the whole economy into a balloon of debts over debts.This is what Imam Al-Ghazali had predicted 900 years ago when he insisted that money should not be taken as an object of trade.He remarked: "Riba (interest) is prohibited because it prevents people from undertaking real economic activities.This happens when somebody with money is allowed to earn more on the basis of interest […] It becomes easy for him to earn more money on the basis of interest without exerting himself to real economic activities.This leads to hampering the real interest of humanity, because the interest of humanity cannot be safeguarded without real trade skills, industry and construction."69 All this happened because money was allowed to be used as a machine producing more money on the basis of interest, and its function to act as a medium of exchange was left out of the equation.The aspect of interest has been criticized by many economists.For one, James Robertson writes; "The pervasive role of interest in the economic system results in the systematic transfer of money from those who have less to those who have more.Again, this transfer of resources from poor to rich has been made shockingly clear by the Third World debt crisis: "[…] It is partly because those who have more money to lend get more in interest than those who have less; it is partly because the cost of interest repayments now forms a substantial element in the cost of all goods and services, and the necessary goods and services looms much larger in the finances of the rich.When we look at the money system that way and when we begin to think about how it should be redesigned to carry out its functions fairly and efficiently as part of an enabling and conserving economy, the argument for an interest-free monetary system for the 21 st century seems to be very strong.

The banking sector
Western banks lend excessively to augment their profits.They are assured of the repayment of their deposits with interest.This leads to an unhealthy expansion of credit, to excessive leverage, to even subprime debt and to living beyond means.

71
Two factors enable Western banks to assume that they will not suffer losses.The first is collateral.If there is no risk-sharing, the bank will not always undertake a careful evaluation of the collateral and they may extend financing for any purpose, including speculation.The second factor that provides protection to banks is the "too big to fail' concept, which assures them that the central bank will bail them out.Banks equipped with such safety nets have incentives to take greater risks than what they otherwise would.

72
The easy availability of credit makes it possible for the public sector to have high debt profiles and for the private sector to live beyond its means and to have high leverage.This leads to financial fragility and debt crisis.The easy availability of credit and the resultant steep rise in debt are the result of inadequate market discipline in the financial markets due to the absence of risk-sharing. 73The prevailing financial crisis, which started in 2007, caused Western banks to be bailed out of three to four trillion dollars by the US, UK, Europe and a number of other countries.The financial crisis has seized up money markets and has led to a precipitous decline in property and stock value, a rise in bank failure, and nervous anxiety about the fate of the global economy and the financial system.
This created an uneasy feeling that there is something basically wrong with the Western interestbearing banking system.

AN ALTERNATIVE TO A WESTERN INTEREST-BASED MODEL: ISLAMIC FINANCIAL ARCHITECTURE
As the current economic crisis unfolded, it became evident that the international financial architecture is in need of reform.The crisis obliges us to re-plan our journey and to set ourselves new rules.This crisis becomes an opportunity for discernment to shape a new vision for the future.A system concerned only with interests, advantages and power calculations will not be able to create a world in which humanity is central.If global banking practices were based on Islamic principles, we would not be seeing the kind of crisis we are living through now.
In its very nature and as emphasized in this research, interest is a hindrance to the moral and material growth of the society.Money lenders who grab interest income appear to be motivated by greed, selfishness, narrowmindedness, self-aggrandizement and malignancy.These negative qualities in society dilute the positive qualities related to charity. 74In the Quran, Allah deprives usury (riba) of all blessings, but blesses charity. 75The reason why the Quran is so strict about the levying of interest is that Islam is against all forms of exploitation.Islam condemns, for example, all forms of exploitation, particularly injustice in the form of a lender being guaranteed a positive return without sharing the risk with the borrower.The borrower spends labour and time and utilizes his or her skills, but there is no guarantee of profit.In contrast, the money lender simply lends funds and does not invest time or labour in the business, but is guaranteed a fixed rate of profit in the form of interest.Interest charged on loans and advances therefore amounts to exploitation as the borrower is in a weaker position.

76
There arises instances where the debtor has paid the original amount of a loan in full, but due to the accumulation of interest, the amount outstanding is more than the principal amount advanced.In Islam, money is only a medium of exchange.It has no value in itself.It should therefore not be allowed to give rise to more money via interest payments.Money advanced to a business as a loan, is regarded as a debt of the business and not capital and is therefore not entitled to any return (interest).Usury charges render the full adjustment of loans almost impossible, and the poor person continues taking one loan after the other to get out of the vicious circle without any success.The poor person has already paid much more than the original amount, but the outstanding amount continues to rise due to the application of usury (riba).This notion can be illustrated in the following story highlighted in the British media.David Taylor, a leukemia patient, had taken a loan from a major Western bank.The bank overdraft was growing at a frightening rate due to the bank's high interest rate.The poor and sick man was worried that the longer he lived, the more of his life assurance money would be 74 Ahmad Elimination of Riba (1994) 48. 75 Holy Quran, Surah Al-Baqarah 2: 276. 76Siddiqi Islamic Banks (1994) 25.
taken by the bank, leaving little or nothing for his family.Every additional day of his life meant less money for his wife and children.He was, therefore, not interested in prolonging his life.This example explains the misery of the application of overcharging of loans.Islam thus determined that only the principal amount should be recovered on such loans provided the borrower is in a position to repay. 77It is on this moral and economic logic that Islam prohibits usury (riba) in all its forms and intent.

LIFE WITHOUT USURY (RIBA)
The interest-based economic society is tottering on the brink of disaster.It is in times like these that the phenemenon of the resurgence of Islamic banking starts to make its impact.Islam is not merely a spiritual formula but as a complete code of life in itself envisaging the economic well-being of an individual as well as a society upon sound foundations and divine instructions.
Islam does not stop at the moral condemnation of usury.It also reforms the character of a people so that an inclination to usurious businesses is suppressed and replaced by a spirit of sympathy and generous cooperation in human society.
As mentioned in the paper, in an usurious (capitalist) society, the individual is exploited.As a consequence, the chances of developing trade and industry diminish and opportunities for capital formation become scarce.The rise in the capital holdings of a few individuals will cause a depression in the collective economy.In a capitalist system, one individual enhances accumulated wealth in a way that renders thousands incapable of earning anything, let alone saving.
In contrast to this, in a society in which the interest is zero, the state guarantees relief to every citizen in need, and stinginess and hoarding of wealth will vanish.The affluent citizens will spend freely and pass on enough purchasing power to the poor citizens.This will promote trade and industry, which will open up more employment opportunities.The majority of the people will save because of enhanced income.This saving will not arise out of stinginess, apprehension, or greed, but will be the product of an economic system in which the affluent will still be left with much surplus wealth as they will not find any needy person to whom it may be denoted.It is evident that Islamic banking is based, on one hand, on the avoidance of all forms of financial exploitation and, on the other hand, on the creation of wealth and the alleviation of poverty.Herein, the Islamic banking system could contribute to alleviating the global financial crisis which we face.The capitalist system has failed in achieving this social justice for which the Islamic system 77 Siddiqi Islamic Banks (1994) 26.
was tailored.

Conclusion
The study has achieved its aim in solving the riba conundrum.In view of this research, there is now consensus that the term usury (riba) covers all forms of interest and not only "excessive" interest.If the global economy has to bear this economic reality or theory in mind, we would not be seeing the kind of finance crisis we are living through now.The study also asserts that interest is a hindrance to the moral and material growth of society in which the individual is exploited.This notion is taboo in Islam as it morally condemns the taking of interest.In so doing, Islam reforms the character of a people so that an inclination to usurious businesses is suppressed and replaced by a spirit of sympathy and generous co-operation in human society.The research serves as a landmark for social justice in Islamic finance and banking law. 10 The Teaching of the Canonists on Usury(XII, XIII and XIV  Century).Pontifical Institute of MedievalStudies,McLaughlin The Teaching of the Canonists on Usury (XII, XIII and XIV Century) 81.41McLaughlinThe Teaching of the Canonists on Usury 84.42McLaughlin cited Cinus on Cod.iv.32.24: "Audivi Dynum dicentem quod non quia usurae prohibitae sunt jure divino et jure canonico et civili et quia foenerare est mortale peccatum sicut rapere." 53McLaughlin The Teaching of the Canonists on Usury 97.54McLaughlinThe Teaching of the Canonists on Usury 97.55McLaughlinThe Teaching of the Canonists on Usury 103. 56q.3.c.1: "Si feneraveris hominem, id est sit u mutuum dederis pecuniam tuam a quo plus quam dedisti expectes… fenerator es."In McLaughlin The Teaching of the Canonists on Usury 106.57X.V.19.c.10: "Hujusmodi hominess pro intentione lucre quam habent… judicandi sunt male agree, et ad ea quae taliter sunt accepta restituenda, in animarum judicio efficaciter inducendi."InMcLauglinTheTeaching of the Canonists on Usury 106.58Swartz,NicoP.The Prohibition of Usury(Riba).A Moral-Ethical Perspective of Islamic Financial and Banking Law: A Comparative Study between the Islamic and the ConventionalModel.Shariah Journal, vol.17, no. 59 Swartz A Moral-Ethical Perspective of Islamic Financial and Banking Law 415. 60Institute of Policy Studies Elimination of Riba from the Economy 38. 61Institute of Policy Studies Elimination of Riba from the Economy 39. 62 Vadillo Fatwa on Banking (2006) 34. 63McCall Cardoza Law Review 569. 64