Chapter 2: Discipline, Ethics, and the Prohibitions in Divine Exchange Law and Their Implications for Ethical Finance

The chapter discusses the external prohibitions in Islamic exchange law, like ribā, gharar, gambling, and short selling, and the implications of these prohibitions for Islamic finance. The prohibitions provide in-built controls to avoid the bubble-and-burst phenomenon leading to crashes, liquidations of the institutions at the cost of the investors in the middle class, and crises. It provides for a proper linkage between finance and the real economy. It discusses how the principles of Islamic economics and finance may lead to a just, sustainable, and equitable economy. It also highlights the evolution of Islamic finance in the modern age, the development of Islamic financial architecture, and the current structures of the Islamic finance industry.