The international debt crisis and the economics of Islam (M.Phil. Thesis)

This thesis examines the economics of international lending and borrowing, and explores the effects of economic crises on the world system resulting in loan defaults and debt rescheduling. In particular, the thesis examines the growth of the debt crisis in the 1980's and how developing countries have had to cope with the burden of debt repayments. The Western use of interest rates in borrowing and lending is contrasted with the Islamic system on an ethical level. These ideas are then developed and applied to the case of Sudan where it is shown that the adoption of an Islamic approach to debt repayments could lead to a substantial reduction in the financial burden facing that country. Developing countries can benefit significantly if finance is extended to them through an Islamic system as opposed to through current methods through Western institutions.