Munich Personal RePEc Archive

A Comparison between Ottoman Cash Waqfs (CWs) and Participation Banks and Modern Interest-free Financial Institutions

Bulut, Mehmet and Korkut, Cem (2016): A Comparison between Ottoman Cash Waqfs (CWs) and Participation Banks and Modern Interest-free Financial Institutions. Published in: Vakıflar Dergisi No. 46 (25 December 2016): pp. 22-44.

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Abstract

The Ottoman State is accepted as the civilization of waqf so that the borrowing of people who needed cash was provided by waqfs that had cash as capital. These waqfs operated their capitals within the limits that were drawn by Ottoman ulema under the effects of interest ban in Islamic states. These waqfs can be thought of as the pioneers of modern Islamic financial institutions. The CWs became the factor of stability in the Ottoman financial system with controlling high usury rates and determining the market interest rate. Today, the participation banks as interest-free financial institutions fulfill this function. The participation banks that bring together the people who want to borrow money without interest and the people who want to operate his capital with halal ways are separated from cash waqfs in some respects. In this study, even though they follow similar financial methods, the difference in their purposes and other characteristics of interest-free financial institutions and their pioneer of CWs will be examined.

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