Interest Bans and Institutions: An Economic Theory of Inhibitive Law Persistence in Islam and Christianity [Rubin]
Jared Rubin
California State University, Fullerton
Until recently, many scholars attributed the divergence in Middle Eastern and Western European economic development to the “conservative nature” of Islam. This paper departs from such scholarship, suggesting that institutions supporting economically inhibitive laws are more likely to be self-enforcing in the Muslim world – providing an appearance of conservatism. A theoretical model suggests that this outcome stems from the greater degree of overlap between religious and political authorities in Islam. I substantiate this claim by analyzing interest bans, highlighting the mechanisms supporting both the ban’s persistence in Islam and the emergence of inflexible credit-extending institutions in the Ottoman Empire.
File: Rubin-InterestBansInstitutions-10-21-07ASREC.pdf [381.22KB]
Published 11/02/2007
Filed under: (2007), *rubin, @asrec'07, economic development, economic growth, economic history, islam, legitimacy