Examining the Jurisprudential and Legal Foundations of the Profit Determination Model in the Islamic Banking System
Keywords:
Profit, Islamic banking, Jurisprudence, LawAbstract
The aim of this study is to examine the jurisprudential and legal foundations of the profit determination model in the Islamic banking system. This research has been conducted using a descriptive-analytical method, and the data collection technique employed is document-library based, relying on credible books, articles, websites, and academic portals. The findings of the study indicate that the issue of bank interest is among the newly emerged jurisprudential topics that, with the emergence of the modern global banking system, has become one of the main challenges for Islamic, interest-free banking. A group of Shi’a jurists believe that charging and paying interest on bank loans constitutes usurious lending (ribā al-qarḍ) and is therefore prohibited. However, some jurists, by altering certain conditions, have deemed such interest permissible. Additionally, another group of jurists and legal scholars argue that bank interest is distinct from ribā, and in their writings, they have presented arguments based on historical narratives or epistemological reasoning to support this distinction. Ultimately, this study concludes that a banking system based on a profit model linked to capital productivity is more successful in achieving the goals of both the real and monetary sectors of the economy. It is also better able to meet the needs of depositors, borrowers, and banks. The profit model based on capital productivity is thus considered a desirable model, and the necessary foundations for its implementation should be established.
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