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AD 600 to 700

Economic principles of Islam

The founding texts of Islam, and notably the Koran which dates from the first half of the 7th century AD, cover various aspects of day-​​to-​​day life and incorporate a number of elements from Jewish and Christian teachings. The obligation to give alms or zakat (which signifies purification in Arabic) to the poor, either on an individual or collective basis, is one of the five pillars of Muslim life. Private property is encouraged, although Muslims must recognise that all property is ultimately owned by God.

Regarding money, Islam forbids loans at interest, and promotes methods of financing where all stakeholders share in the profits and losses generated by the undertaking. The remuneration of the lender thus depends on the profitability of the transaction he is helping to finance. These principles form the basis of all Islamic banks and financial institutions.

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