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Interest - “Loan Cost” or “Sin”?

Author

Listed:
  • Violeta ISAI

    (Faculty of Economics and Business Administration, Dunarea de Jos University of Galati, Romania)

  • Riana Iren RADU

    (Faculty of Economics and Business Administration, Dunarea de Jos University of Galati, Romania)

Abstract

Interest has appeared from the people need to borrow main agricultural products. Over the time, it has been the subject for many theories - for interest, and against interest- all of them having various reasons. Church has, in general, forbidden interest, but the economic reasons have won, considering fair to reward the creditor for the time passed from the moment of loaning, for the monetary devaluation because of inflation, and for the reason that money is a good which must produce profit. Nowadays, the interest rate and the way haw it modifies the report between demand and supply, is a very debated subject. The interest rate is an instrument in the hand of Governments and International Financial Organisms, and interest is used in the conventional banks from the entire world. But, in the system of Islamic Economy, interest is considered “a sin”, and the appearance of Islamic Banks is a proof for the efforts to introduce in the banking system of Muslim countries, a modality of financing which respects, from the religious point of view, what is allowed and what is forbidden.

Suggested Citation

  • Violeta ISAI & Riana Iren RADU, 2014. "Interest - “Loan Cost” or “Sin”?," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 2, pages 31-36.
    • Handle: RePEc:ddj:fseeai:y:2014:i:2:p:31-36
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    Cited by:

    1. Nicoleta BARBUTA-MISU & Mihaela-Felicia BODEA, 2014. "The Role of Capital Structure in Company’s Financing," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 3, pages 26-32.

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