What you sell is what you lend? Revealing complexity of riba in loan contract

  • Abdul Ghafar Ismail
  • Bayu Taufiq Possumah
  • Mohd Akil Muhamed Ali


The purpose of this paper is to resolve and examine the possible modus operandi of riba on selling and loan contract according to the Sharia’s precepts. This paper investigate the Qur’an, hadith, and juristic views on such relevant issues based on the survey done on the several sources, i.e., previous studies, Al-Qur’an and Al-Hadith and juristic views and deviate from the existing studies in two aspects, i.e., the selling and buying of goods do not involve riba and also the banks provide loan without riba. The findings of this paper are: First, the concept of interest in lending is widely accepted both in theory and practice. Second, riba exists in selling and lending. Third, the categorization and application of extensive and complex subjects of riba in economic life bring all speculative and usurious transactions under the rubric of riba prohibition. This paper important because express and disclosure riba in both exchange of goods and loans, also the social and economic developments. This is an original undertaking of this paper.


Riba Complexity Selling Loan Contract 

JEL Classification

GG0 G2 G24 



The authors benefited from the research Grant No. UKM-11KH-05-FRGS0087-2009. We would like to thanks the partcipants of the 13th Malaysian Finance Association Conference 2011, 10–12 June 2011, Langkawi, Kedah Malaysia for their comments.


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Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  • Abdul Ghafar Ismail
    • 1
    • 2
  • Bayu Taufiq Possumah
    • 3
  • Mohd Akil Muhamed Ali
    • 4
  1. 1.Islamic Research and Training InstituteIslamic Development BankJeddahKingdom of Saudi Arabia
  2. 2.Research Center for Islamic Economics and FinanceUniversiti Kebangsaan MalaysiaBangiMalaysia
  3. 3.Institute Islam Hadhari, Research Center for Islamic Economics and FinanceUniversiti Kebangsaan MalaysiaBangiMalaysia
  4. 4.Department of Al-Qur’an and Al-Hadith, Faculty of Islamic StudiesUniversiti Kebangsaan MalaysiaBangiMalaysia

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