Revisiting the concepts of money, profit and interest from the perspective of value and diminishing marginal utility

This article is a theoretical article that attempts to clarify the inherent meanings of the concepts of profit and interest, i.e. two important concepts in finance, particularly Islamic Finance. These are age-old concepts in economics that still draw confusion among people. Profit comes from trade a...

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Main Authors:	Mydin Meera, Ahamed Kameel, Mubasheera, Hamida
Format:	Article
Language:	English
Published:	Center for Central Banking Research and Education, Bank Indonesia 2015
Subjects:	HG201 Money
Online Access:	http://irep.iium.edu.my/46457/ http://irep.iium.edu.my/46457/ http://irep.iium.edu.my/46457/1/46457.pdf

id	iium-46457
recordtype	eprints
spelling	iium-464572018-10-16T04:17:23Z http://irep.iium.edu.my/46457/ Revisiting the concepts of money, profit and interest from the perspective of value and diminishing marginal utility Mydin Meera, Ahamed Kameel Mubasheera, Hamida HG201 Money This article is a theoretical article that attempts to clarify the inherent meanings of the concepts of profit and interest, i.e. two important concepts in finance, particularly Islamic Finance. These are age-old concepts in economics that still draw confusion among people. Profit comes from trade and interest comes from lending and borrowing activities. While the former is much encouraged in Islam, the latter is strongly forbidden. Nonetheless, in today’s monetary and financial circumstances, the market interest rate is being used as a benchmark for the Islamic profit rate, drawing criticisms from many quarters that both are indeed one and the same. Using the fundamental economic concept of marginal utility, this paper attempts to clarify the fundamental difference in these two concepts and their implications for modern finance, particularly Islamic finance. Indirectly in the process, the paper also clarifies the concepts of money and riba. Center for Central Banking Research and Education, Bank Indonesia 2015 Article PeerReviewed application/pdf en http://irep.iium.edu.my/46457/1/46457.pdf Mydin Meera, Ahamed Kameel and Mubasheera, Hamida (2015) Revisiting the concepts of money, profit and interest from the perspective of value and diminishing marginal utility. Journal of Islamic Monetary Economics and Finance (JIMF), 1 (1). pp. 25-53. ISSN 2460-6618 (O), 2460-6146 (P) http://journalbankindonesia.org/index.php/JIMF/article/view/482
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English
topic	HG201 Money
spellingShingle	HG201 Money Mydin Meera, Ahamed Kameel Mubasheera, Hamida Revisiting the concepts of money, profit and interest from the perspective of value and diminishing marginal utility
description	This article is a theoretical article that attempts to clarify the inherent meanings of the concepts of profit and interest, i.e. two important concepts in finance, particularly Islamic Finance. These are age-old concepts in economics that still draw confusion among people. Profit comes from trade and interest comes from lending and borrowing activities. While the former is much encouraged in Islam, the latter is strongly forbidden. Nonetheless, in today’s monetary and financial circumstances, the market interest rate is being used as a benchmark for the Islamic profit rate, drawing criticisms from many quarters that both are indeed one and the same. Using the fundamental economic concept of marginal utility, this paper attempts to clarify the fundamental difference in these two concepts and their implications for modern finance, particularly Islamic finance. Indirectly in the process, the paper also clarifies the concepts of money and riba.
format	Article
author	Mydin Meera, Ahamed Kameel Mubasheera, Hamida
author_facet	Mydin Meera, Ahamed Kameel Mubasheera, Hamida
author_sort	Mydin Meera, Ahamed Kameel
title	Revisiting the concepts of money, profit and interest from the perspective of value and diminishing marginal utility
title_short	Revisiting the concepts of money, profit and interest from the perspective of value and diminishing marginal utility
title_full	Revisiting the concepts of money, profit and interest from the perspective of value and diminishing marginal utility
title_fullStr	Revisiting the concepts of money, profit and interest from the perspective of value and diminishing marginal utility
title_full_unstemmed	Revisiting the concepts of money, profit and interest from the perspective of value and diminishing marginal utility
title_sort	revisiting the concepts of money, profit and interest from the perspective of value and diminishing marginal utility
publisher	Center for Central Banking Research and Education, Bank Indonesia
publishDate	2015
url	http://irep.iium.edu.my/46457/ http://irep.iium.edu.my/46457/ http://irep.iium.edu.my/46457/1/46457.pdf
first_indexed	2023-09-18T21:06:09Z
last_indexed	2023-09-18T21:06:09Z
_version_	1777410946869755904

Revisiting the concepts of money, profit and interest from the perspective of value and diminishing marginal utility

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