Bounding the Boundless: The Excesses of RIBA and the Equality in Exchange in Islam

ABSTRACT The concept of ribā , meaning prohibited excess, has been widely studied by scholars and economists, but it still needs clarification due to ongoing confusion in the existing literature. The main issue is that modern scholars and economists have not fully understood the well‐developed juristic methodology used to study the concept of ribā ; instead, they rely on a weak historical analysis. Their descriptions often differ from the classical understanding of ribā and lack scholarly rigour. Classical Muslim jurists describe ribā in The Qur'ān as an unelaborated term, whereas the Sunnah provides the foundational basis for defining it. This article argues that ribā is difficult rather than unelaborated in the prohibition verses, as the exchange principle mentioned elsewhere in The Qur'ān clarifies it. Both The Qur'ān and the Sunnah instruct Muslims to ensure fairness in exchanges without causing excess or deficit to counter or third parties. Classical Islamic legal thought defines ribā as any stipulated excess without a countervalue that occurs in exchange transactions. It is a form of wealth usurpation disguised as exchange. Ribā appears in various forms, including as a benefit, time delays, and estimated differences. We categorise its basic and applied types as corporeal, incorporeal, and temporal. The prohibition of ribā explicitly forbids commercial monetary debt under the rules of ṣarf contract, making commercial monetary debt and bank credit creation impossible under Islamic law. Ribā can be recognised through correct foundational principles and can be avoided by striving for equality in exchange.