History of Islamic economics

This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. Find sources: "History of Islamic economics" – news · newspapers · books · scholar · JSTOR (October 2016) (Learn how and when to remove this message)

Between the 9th and 14th centuries, the Muslim world developed many advanced economic concepts, techniques and usages. These ranged from areas of production, investment, finance, economic development, taxation, property use such as Hawala: an early informal value transfer system, Islamic trusts, known as waqf, systems of contract relied upon by merchants, a widely circulated common currency, cheques, promissory notes, early contracts, bills of exchange, and forms of commercial partnership such as mufawada.

Specific Islamic concepts involving money, property, taxation, charity and the Five Pillars include:

• zakat (the "taxing of certain goods, such as harvest, to allocate these taxes to expand that, are also explicitly defined, such as aid to the needy");
• Gharar ("the interdiction of chance ... that is, of the presence of any element of uncertainty, in a contract (which excludes not only insurance but also the lending of money without participation in the risks); and
• riba ("every kind of excess or unjustified disparity between the exchanged objects or counter values"^[1]).

These concepts, like others in Islamic law and jurisprudence, came from the "prescriptions, anecdotes, examples, and words of the Prophet, all gathered together and systematized by commentators according to an inductive, casuistic method."^[2] Sometimes other sources such as al-urf, (the custom), al-'aql (reason) or al-ijma (consensus of the jurists) were employed.^[3] In addition, Islamic law has developed areas of law that correspond to secular laws of contracts and torts.

Contemporary Islamic scholars draw heavily on classical opinions.^[4] Modern Islamic economics emerged in the 1945s, and as of 2004 Islamic Banks have been established in over 8 countries, and interest has been banned in three: Pakistan, Iran and the Sudan.^[5]