Since the Koran forbids interest how to banks in muslim countries make money?
Islamic banking is a huge area. Perhaps it’s easier to browse through http://www.islamic-banking.com than to attempt to answer your question on the boards…
You can also check out the website of the Dubai Islamic Bank , the world’s first Islamic bank.
Hope that helps.
Quick answer… Since Shari’a forbids the charging of interest, Muslims simply didn’t lend money. Instead, Jewish bankers filled the void in Muslim economies and still do to some extent.
It is no longer entirely true that Islamic banks don’t charge interest. They tried that, most notably when the Shah was ejected from Iran. It failed as an industry that does not have a way of making a return on investment is bound to fail.
The solution in Iran was to institute a complex network of banking fees that are not interest per se. The effect is the same however, but it does not violate the Koran.
That was one solution but hardly the only one or even the most common. Instead Muslim bankers got creative:
Although bankers did not charge for keeping deposits, they did charge for fees for changing money, for lending money (often concealed as a partnership or commenda of credit to avoid the usury injunction ), and for issuing bills of exchange ( suftaja’a ).
Bolding mine.
From Before European Hegemony: The World System A.D. 1250-1350 by Janet L. Abu-Lughod ( 1989, Oxford University Press.
Sometimes they even got direct official support for such maneouvers:
The instrument through Ebu’s-Su’ud contrived to integrate Islamic and sultanic law was the fetwa, a proclamation issued by a qualified religious authority in response to questions of law and usage…Obviously such a pronouncement would produced by the seyhulislam would have particular weight, and Ebu’s-Su’ud used his authority to to bring “the laws of mankind in harmonry with diviene law.” According to one modern authority, he did so in three principal areas…Third, and most controversially, he justified, in accordance with Hanafi law, the use of endowments ( evkaf ) in the lending of money and the generation of wealth.
Bolding mine.
From The Ottoman Empire and Early Modern Europe by Daniel Goffman ( 2002, Cambridge University Press ).
The above Ebu’s-Su’ud, by the way, was the leading government-appointed “cleric” from 1545-1574 and his reforms set the stage fot Ottoman law for some time to come ( he probably deserves at least some of the credit for Suleiman I’s common sobriquet of “Lawgiver” ).
- Tamerlane
Possible hijack here but doesn’t Suleiman usually get credit for the spread of his codes rather than the codes themselves?
A little of both, I’d say. Real reform and codification of Ottoman law had begun under his great grandfather Mehmed II and had been an ongoing process. But Suleiman I ( or at least his appointees, as above ) made major contributions as well.
Of course he was also a relentless self-promoter, so a little exaggeration of his impact may have crept into the historical record as well ;).
- Tamerlane
The first known example of the “Al Gore, internet creator” phenomenon maybe 