The prohibition of usury and its impact on savings, poverty, unemployment and gross domestic product

Abstract

In today’s world, the element of interest or “usury” cannot be separated from economic activities and is one of the factors of fluctuations and business cycles and an obstacle to economic development especially in third-world countries. There is no difference in Islamic law between usury and interest and there is no difference of opinion among Muslims that usury is prohibited in both the Quran and Sunnah. There are several reasons for the prohibition of usury in the Quran, namely Surah Ar-Rum, Surah An-Nisa, Surah Al-Imran, and Surah Al-Baqarah. Usury causes various evils such as moral, social, and economic evils. However, there are still those who disagree that even if interest is prohibited in Islam, non-usury banking institutions are not viable in the present world. An economic system without interest cannot be imagined. This research has focused on the criticism of usury and the potential effects of usury on poverty, unemployment, GDP, and savings. To summarize the concept of the prohibition of usury and its impact on poverty, unemployment, GDP, and savings, the researcher relied on the inductive-deductive approach. Therefore, this research recommends that an economy free of usury can positively affect the economy.