Principles of Islamic Moral Economy

The prohibition of interest (riba) although not the entire purpose of Islamic finance, is the fundamental basis for any financial and economic transaction. Islamic ethical principles are akin to the ethics, and environmental, social, and governance paradigms as part of sustainable development initiatives. In Islamic finance, fixed return is prohibited, implying that capital should only gain its share of return from economic activity based on a risk-sharing mechanism. Through this, Islamic finance prioritizes real economic activity or asset-backed financing over a debt-based system.

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