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2

To the excellent answers here, I would add that cloth merchants before the industrial revolution would have aggregated the production of large numbers of suppliers and delivered products to large numbers of purchasers, including foreign purchasers. This put them in a position where they naturally ended up doing considerable amounts of factoring. From ...


1

Because it is non-perishable, cloth makes good collateral. Lenders like to have something to use for security. Land might serve this purpose, but it was monopolized by the nobility. The (middle class) "merchants" had few hard goods to put up as security for a loan, but one of them was their "stock in trade." If they didn't repay, the lender would liquidate ...


0

Firstly, if the loan is intended to finance the purchase of a specific asset, then the seller is allowed to accept being paid later or in installments, and is allowed to charge a mark-up on the 'spot price' to compensate for the value of time (this would not be considered usury under Islamic law). There could also be a middle man (i.e. a financier) who buys ...


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Partly through semantics, by replacing use of "interest" either as a term or calculation by a complete system of "reciprocal gifts". In a sense, there is a bit of willful blindness occurring. As I understand it, a mortgage amortization table would be a wholly acceptable system of reciprocal gifts once all internal use of the terms interest and principal ...


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Given that riba is prohibited, as I understand, OP is asking about consumer loans and banks making a profit. The full-explanation requires detailed consideration of politics and philosophy of Islam. So, a simpler answer (if I may) is to just focus on the instruments used in consumer banking (transactions & savings). On payments, there is a spot pricing ...


9

Question: Why were so many of the earliest banks founded by cloth merchants? Also the Medici Bank. One of the most important banks in Medieval Europe who it's said financed the Renaissance. I would imagine that since cloth is non-perishable, cloth merchants might least need to loan and lend money, since stockpiles are most predictably managed. ...


35

If you get rich in a business you soon find that you have no reasonable 'line of work' for your money, or in other word: capital. So you get essentially too rich for meaningful expansion in your core business. And now you can start either to waste it around for personal luxuries or other consumption — or you throw your money around as an 'investor' or money ...


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