Executive Briefing: Economic Morality Without Speculation
Islamic economics bans Riba (usury/interest) and Gharar (excessive contractual ambiguity), mandating profit-and-loss sharing (*Mudarabah* and *Musharakah*) to anchor finance directly into tangible physical productivity.
1. Risk Sharing vs. Debt Transfer
Unlike conventional debt mechanics that shift 100% of entrepreneurial risk onto borrowers during economic downturns, Islamic equity partnerships ensure investors and entrepreneurs share both profits and losses reciprocally.
2. References
- El-Gamal, M. A. (2006). Islamic Finance: Law, Economics, and Practice. Cambridge University Press.