Let there be no compulsion in religion. --Qur'an 2:256

Islamic Finance

The primary features of Islamic finance are that it is commodity-based rather than currency-based and that ALL forms of interest are prohibited. Although an interest-free economic model seemes strange to us today, interest of any amount was strictly forbidden by the Christian Church until the time of the Protestant Reformation and the Industrial Revolution.

Professor David E. Upton, Ph.D., who teaches in the Insurance, Finance and Real Estate Department at Virginia Commonwealth University, has written a very brief outline of Islamic finance. Published in the form of a PowerPoint presentation, a copy is available here.

Those who take unlawful interest will stand before God (on the Day of Judgment) as those whose minds have been corrupted by the influence of Satan. They say that commerce is just like interest. But God has made commerce lawful and has forbidden interest. (Qur’an 2:275)


Comment from Daryl X
Time: 5 December 2008, 00:53

I have a question rather than a comment. This is an example, is it lawful for one to purchase a dozen eggs for $2.00 and take each egg and sell it at a price of $1.00 dollar an egg?

Comment from admin
Time: 5 December 2008, 17:08

That would be a large markup but would be legal in ordinary circumstances if a willing buyer could be found at buy eggs at such a price. There is an exception. Hoarding and price gouging are not allowed. So it would be contrary to shari’ah to corner the market on eggs and then sell them for an exorbitant price. Also, in a time of disaster (drought, famine, flood, etc.) those who have goods to sell are not permitted to take advantage of the buyers’ misfortune by raising the price to “get rich quick”. While it is legal to amass wealth; it is not permitted to take money completely out of circulation or to turn one’s back on the needy.

Comment from Abdul-Nasir
Time: 26 January 2010, 09:48

I am confused with the purpose of this website. Who are you trying to reach? You put up a powerpoint presentation of a proffessor that doesnt a thing about islam and islamic teachings. I feel insulted and disrespected in a way that you can not even fathom! I am really disgusted. Can you tell me what the difference is between ‘hadith’ and the ‘sunnah’???? At that point I completely stopped reading the so called presentation. He is specialised in western finances NOT islamic finances. Tell the proffessor to stay out of Islam or become a muslim. However do not mislead muslims and non-muslims!

Another thing, when you translated the Holy Quran, where did you get the source from? Or did you translate it yourself?

And when you answered the question of Mr Daryl about the eggs, where are your sources? From which hadith? From which verse of the Quran? From which Islamic scholar? OH YEAH….sorry, you didnt use any of these! Do you want me to continue……????

As Allah is my witness, I shall be a witness on the day of judgement of your vigilante actions, if you do not rectify these actions of yours.

Comment from admin
Time: 26 January 2010, 21:49

Thank you for taking the time to share your thoughts with me.

The main purpose of the website is to bring to the attention of English-speaking non-Muslims news about Islam and the Muslim world. Most of the daily items are excerpts of news items from a variety of sources around the world. I always include a link to the original, complete article. Occasionally, I add a personal comment to the excerpt published on the site. Of course, the articles can also be read by Muslims and sometimes may be of particular interest to them too.

My intention (may Allah judge me accordingly) is to present information that counteracts some of the extreme anti-Islamic material that is so frequently found on the Internet.

As for the Powerpoint presentation on the basic principles of Islamic finance, it is very simplistic but nevertheless generally accurate in its broadest terms as a way to introduce Western readers to the fundamental concepts of a non-riba based financial system. Although Prof. Upton may not be a Muslim (I do not in fact know what his religion is) his “very brief introduction”, as he calls it, is a generally accurate, if succinct, OUTLINE of the salient principles of islamic finance presented in contrast to interest-based and currency-based Western capitalism. If you can point me to a better, yet brief and simple outline of Islamic finance, I would be glad to use it instead. Furthermore, I think you are exaggerating when you suggest that that Prof. Upton “doesn’t [know] a think about Islam and Islamic teachings “. In regard to Islamic finance, could you point out any particularly striking errors (keeping in mind that his presentation is a bare bones overview and not a detailed essay)?

As to his confusion about the sunnah and the ahadith, it is not an uncommon mistake and one that is sometimes seen among Muslims. After all, the two terms are closely related. Surely, I do not have to tell you that the sunnah is the Prophet Muhammad’s (peace be upon him) sayings, actions and inactions. Today, our access to his teachings and actions is through the written record of them that has come down to us in the form of the ahadith. The ahadith are the written traditions that relate the deeds and utterances of the Prophet (pbuh) as recounted by his Companions. Today, our knowledge of the sunnah is through the ahadith.

Concerning my comment about eggs: the licit markup between a willing buyer and willing seller and the general prohibition against hoarding and profiteering are generally known rules of Islamic law. Surely, you do not believe otherwise. With respect to hoarding, in “al-halal wal-haram”, Sheikh al-Qaradawi talks about hoarding in these words: “Freedom for individual and natural competition in the marketplace is guaranteed by Islam. Nevertheless, Islam severely condemns those who, driven by ambition and greed, accumulate wealth at the expense of others and become rich by manipulating the prices of food and other necessities. This why the Prophet (peace be on him) denounced hoarders in very strong words, saying, ‘If anyone withholds grain for forty days out of the desire for a high price, Allah will renounce him.’ [Reported by Ahmad, al-Hakim, Ibn Abu Shaybah and al-Bazzar.] He also said, ‘If anyone withholds goods until the price rises, he is a sinner.'” [Reported by Muslim]

The foregoing and other similar ahadith are the basis for the teaching of the scholars that hoarding is prohibited in two situations: when it is injurious to the people of a country (for example when those with goods resort to price gouging after a disaster) and when the hoarder’s aim is to interfere with the free market negotiation of prices in order to drive up profits.

Have you read any of the other information on my website? I ask the question because of your accusation that I resort to “vigilante actions”, which seems to mean something negative (the term “vigilante” refers to actions that seek to impose justice, although the term is often used pejoratively to condemn those who take the law into their own hands). Have you noticed flagrant errors on other pages on the site?

I do not translate the Qur’an. When I quote the English meaning of a Qur’anic verse, I usually have recourse to one of several recognized English versions. Sometimes, I modernize archaic English spellings or syntax to make the citation clearer for a modern reader. If you would point to any specific Qur’anic citations on the site, I could tell you what my English source was.

Whether I am succeeding or not, all I am trying to do is a form of Internet da’wa that involves bringing basic information about Islam to non-Muslims in the hope that they will become interested in knowing more about Islam and, in cha’ Allah, become witnesses to the truth revealed to mankind by Allah through his Books and his Prophets.

Please feel free to point out any errors on my site. However, the rather non-specific criticism that you have leveled against me this time is not very helpful to me. Indeed, it is hurtful. It pains me to be attacked by a brother. We should be supporting one another, not attacking one another.

Abu Musa Ash’ari (Allah be pleased with him) relates that the Prophet (peace be on him) said: “The bonds of brotherhood between two Muslims are like parts of a house; one part strengthens and holds the other. He intertwined the fingers of one hand between those of the other to elucidate and illustrate the point. (Reported by Bukhari and Muslim).


Abdelkarim E.
Publisher of Qalam

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