The establishment of a practicable system of economy: –

Islam encourages the economy to work in natural way and roots of which are very practical without any exterior forces to do so. That put forth the very reason of being a human to perform at its natural capacity level without exploitation of oneself.

Enabling every one to get what is rightfully due to him:-

Islam being a religion beyond boundaries allow people to earn wealth by actually participating in the work process thus earn the wealth by putting ones efforts directly and practically.

Eradicating the concentration of wealth:

It is of utmost importance in Islamic jurisdiction that the wealth should not be shaking in the hands of few people rather it is encouragingevery one to earn halal income.It is done to reduce the gap between Rich and poor that is result of natural process of economic system.

Economic Rationale of Riba Prohibition and Implications

If we analyze the interest based economic system, we can depict is inefficiency from its incapability of allocation of resources and growth as evident from past track record of the same.

Conventional economists claim that their mechanism of interest based economy assures and guarantees the efficient utilization of available funds. As per Keynesian theory of efficiency that every investor looks for marginal efficiency of investment as their focal point but it is also believed that discount rate(interest rate) is determined by demand and supply. The decision making point is always that MEI must be greater that determined Discount rate or else the project can not be undertaken. he point of discussion here is that what will happen to those projects which do not comply with the MEI/DR? Here comes the utilization of those funds which will remain unutilized, Islamic economic system believes in the risk and profit sharing mechanism thus labor productively will be improved in comparison to conventional based system how ever it should be noted that the same problem still persists in both economic systems that is of prediction of discount rate.

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It is also being noted that interest based economic system which is regulated infact controlled by Interest rate factor is affecting the global economy severly.Shariha has strictly prohibited the use of Riba at minute level where as Riba free system offers profit and loss sharing system which is expected to be free from all these contradictions as a whole.

An example of economic exploitation Riba: A person who lends Rs. 100,000/= at a fixed rate of 10% annually hence he will get 10,000/= extra for the waiting of his one year hence he is selling 100,000 for 120,000 without doing any labor work which is doubtlessly an economic exploitation.

Not only Islam but also other religions have rigorously prohibited the Riba. The economic reasons are as follows:

Riba stimulate the wealth to accumulate in few hands chasing major portion of wealth in the hands of few that is going to be problematic for rest of others.