Debt Management with a Conscience

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Mohammad Hashim Kamali


The inner stability and resilience of Islamic finance will not hold, and the low risk element therein is bound to diminish unless the shari'ah principles are diligently observed. The world experienced two major financial crises within a decade: the currency and stock market crises of 1997–98, and now a crippling recession that began with the US subprime debacle caused by excessive lending to borrowers unable to make repayment. Both originated in ‘asset bubbles’ and unlimited creation of fiat money that loaded the market with the sale of debts, or bay' al-dayn, as it is known in the jargon of shari'ah law. Dealing in debts that lacked any asset base overwhelmed the financial system.

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