Comparative Study of Zero Interest Rate Theory and Prohibition of Usury in Islam

Researches undertaken by capitalistic economists, show that in order to achieveoptimal conditions of market economy, interest rate must be zero. On the otherhand, in Islamic economics usury is forbidden and its appearance in economicrelations is prohibited. Is there any relation between recent economic propositionsof zero interest rate and the law of forbiddance of usury in Islamic economics?The current paper, with its analytical-descriptive approach, will look into thefollowing hypothesis: Theories of zero interest rate in Capitalist economic systemare different from law of forbiddance of usury in Islamic economic system and theconcept emphasized in the forbiddance of usury is not extracted from these theories.In order to analyze this supposition, in the beginning the article generallyanalyzes the historical trend of changes in interest rate theories in Capitalist systemup to the time it reached the zero interest rate theory. Subsequently, while relyingon the conclusions of previous analysis, it evaluates the relation of these theorieswith the Islamic viewpoint regarding usury. The conclusions achieved show thattheories of zero interest rate are different from law of forbiddance of usury, inIslamic economics, and the concept of elimination of usury from loan, is notextracted from those theories.