The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Islamic Economic Institutions

  • Timur Kuran
Reference work entry


The economic institutions of the classical Islamic world include Islamic contract law and the waqf, a form of trust. Until modern times, these two institutions were generally beneficial to economic performance. However, each had limitations that eventually blocked modern economic growth. Islamic contract law discouraged the formation of large and long-lived partnerships, thus obviating the need for business techniques and organizational forms associated with economic modernization. The waqf, designed as a rigid organization, locked capital into inefficient uses. Not until modern times has the corporation, a more flexible organizational form, entered the legal systems of the Islamic world.


Charitable contributions Choice of law Contract law Corporation Double-entry bookkeeping Industrial revolution Inheritance Interest Islamic economic institutions Limited liability Partnerships Tax farming Waqf Zakat 

JEL Classifications

This is a preview of subscription content, log in to check access.


  1. Çizakça, M. 1996. A comparative evolution of business partnerships: The Islamic world and Europe, with special reference to the Ottoman archives. Leiden: E.J. Brill.Google Scholar
  2. Çizakça, M. 2000. A history of philanthropic foundations: The Islamic world from the seventh century to the present. Istanbul: Boğaziçi University Press.Google Scholar
  3. Coşgel, M., and T. Miceli. 2005. Risk, transaction costs, and tax assignment: Government finance in the Ottoman Empire. Journal of Economic History 65: 806–821.CrossRefGoogle Scholar
  4. Findley, C. 1989. Ottoman civil officialdom: A social history. Princeton: Princeton University Press.CrossRefGoogle Scholar
  5. İnalcık, H. 1994. The Ottoman state: Economy and society, 1300–1600. In An economic and social history of the Ottoman Empire, 1300–1914, ed. H. İnalcık and D. Quataert. Cambridge: Cambridge University Press.Google Scholar
  6. Issawi, C. 1982. The transformation of the economic position of the Millets in the nineteenth century. In Christians and Jews in the Ottoman Empire, ed. B. Braude and B. Lewis, vol. 1. New York: Holmes and Meier.Google Scholar
  7. Kuran, T. 2001. The provision of public goods under Islamic law: Origins, impact, and limitations of the waqf system. Law and Society Review 35: 841–897.CrossRefGoogle Scholar
  8. Kuran, T. 2003a. Islamic redistribution through zakat: Historical record and modern realities. In Poverty and charity in Middle Eastern contexts, ed. M. Bonner, M. Ener, and A. Singer. Albany: State University of New York Press.Google Scholar
  9. Kuran, T. 2003b. The Islamic commercial crisis: Institutional roots of economic underdevelopment in the Middle East. Journal of Economic History 63: 414–446.CrossRefGoogle Scholar
  10. Kuran, T. 2004a. Islam and Mammon: The economic predicaments of Islamism. Princeton: Princeton University Press.CrossRefGoogle Scholar
  11. Kuran, T. 2004b. The economic ascent of the Middle East’s religious minorities: The role of Islamic legal pluralism. Journal of Legal Studies 33: 475–515.CrossRefGoogle Scholar
  12. Kuran, T. 2005. The logic of financial Westernization in the Middle East. Journal of Economic Behavior and Organization 56: 593–615.CrossRefGoogle Scholar
  13. Lewis, M., and L. Algaoud. 2001. Islamic banking. Cheltenham: Edward Elgar.CrossRefGoogle Scholar
  14. Rahman, F. 1974. Islam and the problem of economic justice. Pakistan Economist 14(24 August): 14–39.Google Scholar
  15. Rodinson, M. 1966/1973. Islam and Capitalism. Trans. B. Pearce. New York: Pantheon.Google Scholar
  16. Saleh, N. 1986. Unlawful gain and legitimate profit in Islamic law: Riba, gharar, and Islamic banking. Cambridge: Cambridge University Press.Google Scholar
  17. Udovitch, A. 1979. Bankers without banks: Commerce, banking, and society in the Islamic world of the Middle Ages. In The Dawn of modern banking, ed. Center for Medieval and Renaissance Studies. New Haven: Yale University Press.Google Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Timur Kuran
    • 1
  1. 1.