Islamic financing focuses more on how the money is invested rather than how much profit there is
Saturday, February 10, 2007NANCY HAUGHT
Ethical investing caters to potential investors who want their money to earn a fair return and accomplish something good at the same time. Islamic investing goes a step further.
In the seventh century, the Prophet Muhammad, a businessman himself, saw the harmful effects of usury, the charging of excessive interest. For hundreds of years, religious leaders and philosophers had warned against the practice: It allowed the rich to profit unfairly from the needs of the poor.
“The Prophet Muhammad forbade interest on money loans,” says Samuel L. Hayes, an professor emeritus at Harvard Business School and co-author of “Islamic Law and Finance: Religion, Risk and Return.” “But he did believe you had a right to earn a return on a house that you owned or a load of dates that you had delivered but hadn’t been paid for.”
