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Abbas Mousavian recognized certain financial instruments as Islamic financial instruments, including certain types of [[qard al-hasan securities]], [[murabaha securities]], and [[lease securities]]. He regarded these securities as appropriate alternatives to [[bonds]] and [[preferred shares]] which are generally based on interest (usury).
Abbas Mousavian recognized certain financial instruments as Islamic financial instruments, including certain types of [[qard al-hasan securities]], [[murabaha securities]], and [[lease securities]]. He regarded these securities as appropriate alternatives to [[bonds]] and [[preferred shares]] which are generally based on interest (usury).


with the aim of making and using Islamic financial instruments, Mousavian maintained that matters such as the conformity of [[securities]] with the standards of the Sharia and Imami jurisprudence, the accounting issues related to securities, the micro- and macroeconomic effects, and the risk involved in trading securities must be considered. He also paid attention to the legitimacy and acceptability of financial instruments at the international and interdenominational levels.
With the aim of making and using Islamic financial instruments, Mousavian maintained that matters such as the conformity of [[securities]] with the standards of the Sharia and Imami jurisprudence, the accounting issues related to securities, the micro- and macroeconomic effects, and the risk involved in trading securities must be considered. He also paid attention to the legitimacy and acceptability of financial instruments at the international and interdenominational levels.


== Introduction ==
== Introduction ==
Seyed Abbas Mousavian was a graduate of the Qom Seminary, a specialist in [[economic jurisprudence]], and an authority on [[Islamic banking]] and financial matters. On the occasion of Mousavian’s death, jurists such as [[Seyed Ali Khamenei]], [[Sadeq Amoli Larijani]], [[Alireza Arafi]], [[Ahmad Moballeghi]], and [[Ali Akbar Rashad]] praised his knowledge of economic jurisprudence in their messages.<ref>“Selections from the Numerous Messages of Condolence,” website of the Monetary and Banking Research Institute of the Central Bank of the Islamic Republic of Iran.</ref> According to Mohammad Javad Tavakkoli, associate professor in the Department of Economics at the Imam Khomeini Institute (r), Mousavian adopted an applied approach to issues of Islamic economics and influenced the implementation of certain laws in this field. Some areas of his influence are as follows:
Seyed Abbas Mousavian was a graduate of the Qom Seminary, an expert in [[economic jurisprudence]], and a theorist on [[Islamic banking]] and finance. On the occasion of Mousavian’s death, jurists such as [[Seyed Ali Khamenei]], [[Sadeq Amoli Larijani]], [[Alireza Arafi]], [[Ahmad Moballeghi]], and [[Ali Akbar Rashad]] praised his knowledge of economic jurisprudence in their messages.<ref>“Selections from the Numerous Messages of Condolence,” website of the Monetary and Banking Research Institute of the Central Bank of the Islamic Republic of Iran.</ref> According to Mohammad Javad Tavakkoli, associate professor in the Department of Economics at the Imam Khomeini Institute, Mousavian adopted an applied approach to issues of Islamic economics and influenced the procedure of certain laws in this field. Some areas influenced by him are as follows:


# The Banking System Transformation Plan; influential in the Fifth Development Plan Law.
# The Banking System reform Plan; influential in the Fifth Development Plan Law.
# The lease securities or sukuk plan for the Securities and Exchange Organization; it prepared the ground for the issuance of banking sukuk under the Fifth Development Plan Law.
# The lease securities or sukuk plan for the Securities and Exchange Organization; it prepared the ground for the issuance of banking sukuk under the Fifth Development Plan Law.
# The design of various forms of sukuk for the securities market and the amendment of certain laws governing this market.<ref>“Seyed Abbas Mousavian: Discourses and Interviews,” pp. 302-303.</ref>
# The design of various forms of sukuk for the securities exchange and the amendment of certain laws governing this exchange.<ref>“Seyed Abbas Mousavian: Discourses and Interviews,” pp. 302-303.</ref>


Mousavian produced more than one hundred works in the field of Islamic economics, both individually and collaboratively.<ref>“An Overview of the Life and Activities of the Late Hujjat al-Islam wa-l-Muslimin Seyed Abbas Mousavian,” pp. 277-278.</ref> His individually authored works include the books Islamic Banking: Theoretical Foundations and Practical Experiences, Islamic Financial Instruments (Sukuk), and [[Islamic Capital Market (book)|Islamic Capital Market]].<ref>“An Overview of the Life and Activities of the Late Hujjat al-Islam wa-l-Muslimin Seyed Abbas Mousavian,” pp. 277-278.</ref> Mousavian received several awards, including the World Award for Islamic Humanities and the Shahid Sadr Award.<ref>“An Overview of the Life and Activities of the Late Hujjat al-Islam wa-l-Muslimin Seyed Abbas Mousavian,” pp. 277-278.</ref>
Mousavian produced more than one hundred works in the field of Islamic economics, both individually and collaboratively.<ref>“An Overview of the Life and Activities of the Late Hujjat al-Islam wa-l-Muslimin Seyed Abbas Mousavian,” pp. 277-278.</ref> His individually authored works include the books Islamic Banking: Theoretical Foundations and Practical Experiences, Islamic Financial Instruments (Sukuk), and [[Islamic Capital Market (book)|Islamic Capital Market]].<ref>“An Overview of the Life and Activities of the Late Hujjat al-Islam wa-l-Muslimin Seyed Abbas Mousavian,” pp. 277-278.</ref> Mousavian received several awards, including the World Award for Islamic Humanities and the Sadr world Award.<ref>“An Overview of the Life and Activities of the Late Hujjat al-Islam wa-l-Muslimin Seyed Abbas Mousavian,” pp. 277-278.</ref>


Mousavian held numerous executive positions and responsibilities, including:
Mousavian held numerous executive positions and responsibilities, including:


* Membership in the [[Jurisprudential Council of the Central Bank of the Islamic Republic of Iran]];
* Membership in the [[Jurisprudential Council of the Central Bank of the Islamic Republic of Iran]];
* Jurisprudential adviser to the Export Development Bank of Iran;
* Jurisprudential adviser to the Export Development Bank of Iran;
* Special adviser to the secretary-general for jurisprudential and economic affairs at the Iranian Leasing Companies Association;
* Special adviser to the secretary-general for jurisprudential and economic affairs at the Iranian Leasing Companies Association;
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=== Biography ===
=== Biography ===
Seyed Abbas Mousavian was born on 2 Khordad 1339 SH in Ajab Shir County in East Azerbaijan Province.<ref>“Biography of Hujjat al-Islam wa-l-Muslimin Seyed Abbas Mousavian,” Ijtihad Network website.</ref> In 1360 SH, amid the Iranian Cultural Revolution, he withdrew from university and began studying religious sciences at the [[Qom Seminary]].<ref>“An Overview of the Life and Activities of the Late Hujjat al-Islam wa-l-Muslimin Seyed Abbas Mousavian,” p. 278.</ref> Beginning in 1368 SH, he attended advanced courses in jurisprudence and principles of jurisprudence for ten years.<ref>“An Overview of the Life and Activities of the Late Hujjat al-Islam wa-l-Muslimin Seyed Abbas Mousavian,” p. 278.</ref> In 1384 SH, Mousavian defended his Level Four seminary dissertation in economic jurisprudence, entitled “The Jurisprudential Rulings of Securities.”<ref>“An Overview of the Life and Activities of the Late Hujjat al-Islam wa-l-Muslimin Seyed Abbas Mousavian,” p. 278.</ref> In addition to his seminary education, he studied theoretical economics at the master’s level at Shahid Beheshti University in Tehran.<ref>“An Overview of the Life and Activities of the Late Hujjat al-Islam wa-l-Muslimin Seyed Abbas Mousavian,” p. 278.</ref>
Seyed Abbas Mousavian was born on 2. Khordad 1339 SH (23. may 1960) in Ajabshir in East Azerbaijan Province.<ref>“Biography of Hujjat al-Islam wa-l-Muslimin Seyed Abbas Mousavian,” Ijtihad Network website.</ref> In 1360 SH, amid Cultural Revolution in Iran, he withdrew from university and began studying religious sciences at the [[Qom Seminary]].<ref>“An Overview of the Life and Activities of the Late Hujjat al-Islam wa-l-Muslimin Seyed Abbas Mousavian,” p. 278.</ref> He was studying advanced courses in Fiqh and Usul al-Fiqh for ten years (1368-1378 SH).<ref>“An Overview of the Life and Activities of the Late Hujjat al-Islam wa-l-Muslimin Seyed Abbas Mousavian,” p. 278.</ref> In 1384 SH, Mousavian defended his Level Four seminary dissertation in economic jurisprudence, entitled “The Jurisprudential Rulings of Securities.”<ref>“An Overview of the Life and Activities of the Late Hujjat al-Islam wa-l-Muslimin Seyed Abbas Mousavian,” p. 278.</ref> In addition to his seminary studies, he pursued a master's degree in theoretical economics at Shahid Beheshti University.<ref>“An Overview of the Life and Activities of the Late Hujjat al-Islam wa-l-Muslimin Seyed Abbas Mousavian,” p. 278.</ref>


== General Foundations in Islamic Economic Research ==
== General Foundations in Islamic Economic Research ==
Some of Seyed Abbas Mousavian’s foundational views concerning Islamic economics are as follows:
Some of Seyed Abbas Mousavian’s foundational views concerning Islamic economics are as follows:


=== Distinction between the Islamic Economic System, the Islamic Financial System, and Economic Jurisprudence ===
=== Distinction between the Islamic Economic System, the Islamic Financial System, and Economic Fiqh ===
According to Mousavian, the literature of Islamic economics comprises three distinct components: the “Islamic economic system,” the “Islamic financial system,” and “economic jurisprudence.”
According to Mousavian, there are three distinct concepts in Islamic economics literature: “Islamic economic system,” “Islamic financial system,” and “economic Fiqh.”


* The Islamic economic system is a system intended to establish public welfare on the basis of Islamic principles. According to Mousavian, to achieve public welfare as its ultimate objective, the Islamic economic system requires three intermediate objectives: economic justice, economic security, and economic growth and development.<ref>Mousavian and Tavhidi, Foundations of Islamic Finance, pp. 5-10.</ref>
* Islamic economic system is a system intended to establish public welfare on the basis of Islamic principles. According to Mousavian, to achieve public welfare as its ultimate objective, the Islamic economic system requires three intermediate objectives: economic justice, economic security, and economic growth and development.<ref>Mousavian and Tavhidi, Foundations of Islamic Finance, pp. 5-10.</ref>
* The Islamic financial system is a subsystem of the Islamic economic system responsible for financing (through the creation of Islamic financial instruments) and reducing the risk involved in transactions.<ref>Mousavian and Tavhidi, Foundations of Islamic Finance, pp. 5-10.</ref>
* Islamic financial system is a subsystem of the Islamic economic system responsible for financing (through the creation of Islamic financial instruments) and reducing the risk involved in transactions.<ref>Mousavian and Tavhidi, Foundations of Islamic Finance, pp. 5-10.</ref>
* Economic jurisprudence explains the rulings governing property and its related relationships in the three fields of production, distribution, and consumption; this discipline includes deriving prescriptive rulings (such as the ruling on [[usury]]) or declaratory rulings (such as the transfer of ownership) concerning financial and economic conduct and relations.<ref>Mousavian and Tavhidi, Foundations of Islamic Finance, pp. 12-20.</ref>
* Economic Fiqh explains the rulings governing property and the related issues in the three fields of production, distribution, and consumption; this discipline includes deducing prescriptive rulings (such as the ruling on [[Riba]]) or declaratory rulings (such as the transfer of property) on financial and economic conduct and relations.<ref>Mousavian and Tavhidi, Foundations of Islamic Finance, pp. 12-20.</ref>


On this basis, in the [[Foundations of Islamic Finance (book)|book Foundations of Islamic Finance]], Mousavian identifies four elements as the foundations of the Islamic economic system and its related subsystems:
On this basis, in the book [[Foundations of Islamic Finance (book)|Foundations of Islamic Finance]], Mousavian establishes four key fundamental components for Islamic economic system and its associated subsystems:


# Islamic doctrinal and theological foundations, including Islam’s underlying worldviews concerning God, existence, humanity, and society.
# Islamic doctrinal and theological foundations, including fundamental Islamic worldviews concerning God, existence (being), humanity, and society.
# Positive and negative divine traditions governing human societies, based on felicity and proximity to God or wretchedness and remoteness from Him; such as the effect of the traditions of Godwariness and gratitude on the economic life of Islamic societies.<ref>Mousavian and Tavhidi, Foundations of Islamic Finance, p. 15.</ref>
# divine traditions that affect positively or negatively on human societies, based on felicity and proximity to God or wretchedness and remoteness from Him; such as the effect of taqwa (piety) and shokr (praise to God) on the economic life of Islamic societies.<ref>Mousavian and Tavhidi, Foundations of Islamic Finance, p. 15.</ref>
# Economic ethics, defined in three areas: the relationship between the human being and God, the relationship between the human being and property, and the relationship between the human being and other human beings. These ethics are founded on immaterial causal relationships and divine traditions and affect the livelihood of individuals and society through immaterial and incalculable means. Ethical economic conduct (in a form outside the framework and principles legally established for it) contributes to the overarching objectives of the Islamic economic system, with functions and outcomes such as poverty alleviation, development, security, and economic justice.<ref>Mousavian and Tavhidi, Foundations of Islamic Finance, pp. 17-19.</ref> Although recommended rulings are jurisprudential, Mousavian classified them under economic ethics.<ref>Mousavian and Tavhidi, Foundations of Islamic Finance, p. 20.</ref>
# Economic ethics, defined in three areas: the relationship between human being and God, the relationship between human being and property, and the relationship between human being and other human beings. The bases of this moral system are immaterial causality and divine traditions that affect on the livelihood of individuals and society through immaterial means Immeasurable in material terms. Ethical economic conduct (regardless of the legal framework and principles) contributes to the overarching objectives of the Islamic economic system. These aim and result functions and outcomes such as poverty alleviation, development, security, and economic justice.<ref>Mousavian and Tavhidi, Foundations of Islamic Finance, pp. 17-19.</ref> According to Mousavian, the recommended rulings fall under the category of economic ethics, though they are discussed in Fiqh.<ref>Mousavian and Tavhidi, Foundations of Islamic Finance, p. 20.</ref>
# Economic jurisprudence, which encompasses rulings governing conduct and relationships concerning property in the three areas of production, distribution, and consumption. These rulings direct individuals’ economic activities toward the objectives of the Islamic economic system. <ref>Mousavian and Tavhidi, Foundations of Islamic Finance, pp. 12-20.</ref>
# Economic Fiqh, which encompasses rulings governing conduct and relationships concerning property in the three areas of production, distribution, and consumption. These rulings direct individuals’ economic activities toward the objectives of the Islamic economic system. <ref>Mousavian and Tavhidi, Foundations of Islamic Finance, pp. 12-20.</ref>


=== Foundations of Financial Instruments (Sukuk or Securities) According to Mousavian ===
=== Foundations of Financial Instruments (Sukuk or Securities) According to Mousavian ===
In connection with the creation and use of Islamic financial instruments, Mousavian considered the following points:
Mousavian identified several key factors essential for the development and implementation of Islamic financial instruments:


# The definition of financial instruments must ensure conformity with the standards of the Sharia and Imami jurisprudence.<ref>Mousavian and Tavhidi, Foundations of Islamic Finance, pp. 48-49.</ref>
# Financial instruments must be defined and regulated in terms of standards of the Sharia and Imami jurisprudence.<ref>Mousavian and Tavhidi, Foundations of Islamic Finance, pp. 48-49.</ref>
# In addition to religious and legal requirements and frameworks, matters such as accounting issues and the risk involved in trading the instrument must be assessed.<ref>Mousavian and Tavhidi, Foundations of Islamic Finance, pp. 48-49.</ref>
# Beyond religious criteria and legal requirements and frameworks, factors such as accounting issues and trading risks must also be evaluated.<ref>Mousavian and Tavhidi, Foundations of Islamic Finance, pp. 48-49.</ref>
# Attention must be paid to the legitimacy and acceptability of financial instruments at the international and interdenominational levels so that they possess international legitimacy and acceptability.<ref>Mousavian and Tavhidi, Foundations of Islamic Finance, pp. 52-58.</ref>
# Legitimacy and acceptability of these financial instruments, internationally and interdenominationally, are important and must be considered in such a way that these instruments are recognized as internationally legitimate and acceptable.<ref>Mousavian and Tavhidi, Foundations of Islamic Finance, pp. 52-58.</ref>
# Attention must be paid to the economic foundations of financial instruments. The economic foundations of financial instruments mean principles and criteria other than the religious conditions and principles stipulated for transactions. For example, in an instrument such as lease securities, in addition to the religious conditions and rulings governing leases, other criteria must be observed for the securities to become an efficient financial instrument. These criteria may be divided into the microeconomic foundations and macroeconomic foundations of financial instruments. Two criteria and foundations of microeconomics are as follows: 1. Liquidity: the capacity of financial instruments to be liquidated and rapidly converted into money. 2. Efficiency: the relative superiority of certain financial instruments over similar instruments in fulfilling customers’ objectives and motivations. Moreover, one of the criteria identified in the field of the macroeconomics of financial instruments is the financial instrument’s alignment with economic growth and justice.<ref>Mousavian, Islamic Financial Instruments, pp. 253-267.</ref>
# The economic foundations of financial instruments must be taken into account. These are not the principles and criteria Sharia has prescribed for transactions. For example, in addition to the religious conditions and rulings governing leases, lease securities must be complied with other criteria to be efficient financial instruments. These criteria may be of those are considered in microeconomics or of those considered in macroeconomics. In microeconomics, say, these are must be observed: 1. Liquidity: the capacity of financial instruments to be liquidated and rapidly converted into money. 2. Efficiency: the relative superiority of certain financial instruments over similar instruments in fulfilling customers’ objectives and motivations. In macroeconomics also criteria such as financial instrument’s alignment with economic growth and justice must be observed.<ref>Mousavian, Islamic Financial Instruments, pp. 253-267.</ref>


=== '''Using the Methods and Instruments of Conventional Economics in Islamic Economics''' ===
=== Using the Methods and Instruments of Conventional Economics in Islamic Economics ===
Mousavian maintains that methods and approaches developed within the conventional economic system are not incompatible with the Islamic economic system. According to him, these methods can be modified within the framework of the Islamic economic system and incorporated into the issues of Islamic economics.<ref>Mousavian, Islamic Banking, p. 29.</ref>
Mousavian maintains that methods and approaches developed within the conventional economic system are not incompatible with the Islamic economic system. According to him, these methods can be modified within the framework of the Islamic economic system and incorporated into the issues of Islamic economics.<ref>Mousavian, Islamic Banking, p. 29.</ref>


== Mousavian’s Views on Islamic Banking ==
== Mousavian’s Views on Islamic Banking ==
Mousavian held several views in the field of Islamic banking, including the following:
Mousavian held several views on Islamic banking, including:


=== '''The Important Role of Exchange-Based Contracts in Islamic Banking Compared with Partnership Contracts''' ===
=== The Importance of Trade-based Contracts in Islamic Banking Compared with Equity-based Partnership Contracts ===
It has been stated that Mousavian’s early thought on banking emphasized the application of [[partnership contracts]] (contracts without a fixed rate of return and based on profit and loss),<ref>Ghafourzadeh, “An Examination of the Development of Professor Mousavian’s Thought concerning the Position of Exchange-Based and Partnership Contracts in Resource Allocation,” p. 87.</ref> but later (for example, in the “book Islamic Banking,” one of his final books), he regarded [[exchange-based contracts]], such as [[murabaha contract|murabaha]], as possessing strong narrative foundations, being effective in Islamic banking, and being superior to partnership contracts.<ref>Ghafourzadeh, “An Examination of the Development of Professor Mousavian’s Thought concerning the Position of Exchange-Based and Partnership Contracts in Resource Allocation,” p. 88.</ref>
It is said that Mousavian emphasized the application of [[equity-based partnership contracts]] (contracts without a fixed rate of return and based on profit and loss) in his earlier thought,<ref>Ghafourzadeh, “An Examination of the Development of Professor Mousavian’s Thought concerning the Position of Trade-based and Equity-based Partnership Contracts in Resource Allocation,” p. 87.</ref> but later (for example, in the book “Islamic Banking” that is one of his latest books) he regarded [[trade-based contracts]], such as [[murabaha contract|murabaha]], as contracts supported strongly by hadiths and being effective in Islamic banking which are more useful than partnership contracts.<ref>Ghafourzadeh, “An Examination of the Development of Professor Mousavian’s Thought concerning the Position of Trade-based and Equity-based Partnership Contracts in Resource Allocation,” p. 88.</ref>


=== '''Permissibility of Penalties for Delayed Payment''' ===
=== Permissibility of Penalties for Delayed Payment ===
According to Seyed Abbas Mousavian, a [[penalty for delayed payment]] is a means of reducing losses resulting from delayed payment of debts. He maintains that failure to pay debts on time leads to a reduction in deferred transactions, the erosion of public trust, a reduction in qard al-hasan loans, the imposition of heavier collateral and guarantees, and a decrease in the volume of financial exchanges.<ref>Mousavian, “A Jurisprudential-Legal Examination of Laws concerning Penalties and Compensation for Delayed Payment in Iran,” p. 12.</ref>
According to Seyed Abbas Mousavian, [[delayed payment penalty]] is a means of reducing losses resulting from delayed payment of debts. He maintains that failure to pay debts on time leads to a reduction in deferred transactions, the erosion of public trust, a reduction in qard al-hasan (benevolent lending), Increasing the burden of bail and guarantees, and a decrease in financial exchanges.<ref>Mousavian, “A Jurisprudential-Legal Examination of Laws concerning Penalties and Compensation for Delayed Payment in Iran,” p. 12.</ref>


=== Superiority of the Islam-Centered Method over the Jurisprudence-Centered Method ===
=== Superiority of the Islam-based Method over the Fiqh-based Method ===
One method for assessing banking matters and financial instruments is the jurisprudence-centered method; that is, banking methods or financial instruments must not conflict with jurisprudence. Moving beyond this view, Mousavian advocated replacing the jurisprudence-centered method with an Islam-centered method. The Islam-centered method adopts a systemic and multidimensional approach to human conduct and interactions. Some researchers in economic jurisprudence have regarded Mousavian’s theory as a movement toward the development of knowledge in this field.<ref name=":0">Mirmoezzi and Ghafouri, “The Development of Professor Mousavian’s Intellectual Method: From the Jurisprudence-Centered Method to the Islam-Centered Method,” pp. 40-58.</ref>
Banking issues and financial instruments could be evaluated by Fiqh-based method. This method aims to ensure that banking methods or financial instruments do not conflict with Islamic jurisprudential rulings. On the other hand, Mousavian proposed Islam-based instead of Fiqh-based method. Islam-based method adopts a systemic and multidimensional approach to human conduct and interactions. Some researchers in economic Fiqh have regarded Mousavian’s theory as a movement toward the development of knowledge in this field.<ref name=":0">Mirmoezzi and Ghafouri, “The Development of Professor Mousavian’s Intellectual Method: From the Jurisprudence-Centered Method to the Islam-Centered Method,” pp. 40-58.</ref>


==== Explanation of the Jurisprudence-Centered Method ====
==== Explanation of the Fiqh-based Method ====
In the jurisprudence-centered method, two stages—jurisprudentialization and jurisprudential establishment—are discussed so that conformity with jurisprudence becomes a criterion for Islamic banking. Mousavian maintained that, at the jurisprudentialization stage, financial institutions are evaluated and reconstructed on the basis of Islamic jurisprudence through an approach based on the [[presumption of validity]]. According to Mousavian, at the jurisprudential establishment stage, a new model based on Shia jurisprudence must be presented or reproduced for financial institutions and instruments that have no precedent in conventional economics.<ref>Mirmoezzi and Ghafouri, “The Development of Professor Mousavian’s Scientific Method from the Jurisprudence-Centered Method to the Islam-Centered Method,” pp. 48-55.</ref>
Fiqh-based method has two stages: jurisprudential analysis of an issue (it may be called jurisprudentialization) and establishment of a jurisprudential entity or institution; therefore the conformity with Fiqh is established as a criterion for Islamic banking. Mousavian maintained that, at the jurisprudential analysis stage, financial institutions are evaluated and reconstructed on the basis of Islamic jurisprudence through an approach based on the [[presumption of validity]]. According to Mousavian, at the establishment stage, a new model based on Shia jurisprudence is presented or reproduced for financial institutions and instruments that have no precedent in conventional economics.<ref>Mirmoezzi and Ghafouri, “The Development of Professor Mousavian’s Scientific Method from the Fiqh-based Method to the Islam-Centered Method,” pp. 48-55.</ref>


==== Explanation of the Islam-Centered Method and Its Superiority ====
==== Explanation of the Islam-based Method and Its Superiority ====
Rather than restricting itself to jurisprudence, the Islam-centered method uses all Islamic data—including ethical rulings, jurisprudence, divine traditions, and the objectives and principles of Islam—in constructing the economic system. Ghafouri and Mirmoezzi, researchers in jurisprudence, state that a study of Mousavian’s works demonstrates that, in some of them, he considered ethical principles or divine traditions when constructing an economic system. They identify the “article Religion and Economics” and the “book General Principles of the Islamic Economic System” as among Mousavian’s works in this field.<ref>Mirmoezzi and Ghafouri, “The Development of Professor Mousavian’s Scientific Method from the Jurisprudence-Centered Method to the Islam-Centered Method,” p. 58.</ref>
Islam-based method uses all Islamic sources instead of being content with Fiqh alone; the Islamic sources includ moral judgments, jurisprudence, divine traditions, and the objectives and principles of Islam. Ghafouri and Mirmoezzi, researchers in Islamic jurisprudence, state that a study of Mousavian’s works shows that he considered ethical principles or divine traditions in constructing an economic system. They cited the article “Religion and Economics” and the article “Introduction the Islamic Economic System” for their calim.<ref>Mirmoezzi and Ghafouri, “The Development of Professor Mousavian’s Scientific Method from the Fiqh-based Method to the Islam-based Method,” p. 58.</ref>


According to these researchers, in this method Mousavian, as in the jurisprudence-centered method, proceeded through two stages in economics: Islamization and Islamic establishment. Islamization means examining and reconstructing the conventional economic model on the basis of all Islamic data, including ethical rulings, jurisprudence, divine traditions, and the objectives and principles of Islam. The Islamic establishment method likewise means presenting a new economic model based on these criteria.<ref>Mirmoezzi and Ghafouri, “The Development of Professor Mousavian’s Scientific Method from the Jurisprudence-Centered Method to the Islam-Centered Method,” p. 59.</ref>
As these researchers state, this method also Mousavian posits two stages just as in the Fiqh-based method: Islamization and establishment of an Islamic entity or institution. Islamization means examining and reconstructing the conventional economic models on the basis of all Islamic sources, including moral judgment, jurisprudence, divine traditions, and the objectives and principles of Islam. The establishment stage means presenting a new economic model based on these criteria.<ref>Mirmoezzi and Ghafouri, “The Development of Professor Mousavian’s Scientific Method from the Fiqh-based Method to the Islam-based Method,” p. 59.</ref>


The superiority of the Islam-centered method over the jurisprudence-centered method lies in the fact that jurisprudence does not encompass all Islamic teachings in every respect, because jurisprudential knowledge does not necessarily correspond to the Preserved Tablet and is a conjectural and ijtihadi process. Accordingly, a model concerning financial institutions and instruments may not conflict with jurisprudence but may nevertheless contradict the principal foundations of the Sharia, such as justice, security, and freedom.<ref>Mirmoezzi and Ghafouri, “The Development of Professor Mousavian’s Scientific Method from the Jurisprudence-Centered Method to the Islam-Centered Method,” p. 63.</ref>
The superiority of the Islam-based method over the Fiqh-based method lies in the fact that Fiqh does not encompass all various Islamic teachings in all areas, because there is no necessary correspondence between jurisprudential knowledge and the Preserved Tablet, as jurisprudential deduction is a process based on conjecture and ijtihad. Accordingly, a model involving financial institutions and instruments may not conflict with jurisprudential teachings but still contradicting the core foundations of Sharia, such as justice, security, and freedom.<ref>Mirmoezzi and Ghafouri, “The Development of Professor Mousavian’s Scientific Method from the Fiqh-based Method to the Islam-based Method,” p. 63.</ref>


=== '''No Distinction between Bank Interest and Usury''' ===
=== No Distinction between Bank Interest and riba ===
By equating [[bank interest]] with usury, Mousavian regarded views distinguishing between the two as incorrect and invalid.<ref>Mousavian and Meysami, “A Critique and Examination of New Views concerning Usury and Bank Interest,” p. 7.</ref> Mousavian refers to several such views:
Mousavian consideres the distinction between [[bank interest]] and riba to be invalid, arguing that these are the same thing.<ref>Mousavian and Meysami, “A Critique and Examination of New Views concerning Usury and Bank Interest,” p. 7.</ref> Mousavian points out some things:


# Usury as an economic necessity of the present age: According to this theory, bank interest or usury is necessary for economic development in the present age and plays an effective role; pursuant to the maxim “necessities permit prohibitions” (al-darurat tubih al-mahzurat), rulings are relaxed in circumstances of harm.<ref>Mousavian, Financial Instruments, pp. 162-163.</ref>
# Riba as an necessary component of the economy of today's world: nowadays, according to this theory, bank interest or riba is necessary for economic development and plays an effective role, therefore pursuant to the maxim “necessities permit prohibitions” (al-darurat tubih al-mahzurat), rulings are relaxed in circumstances of harm.<ref>Mousavian, Financial Instruments, pp. 162-163.</ref>
# Restricting usury to interest charged by private banks: On this basis, bank interest constitutes usury and is prohibited only when it relates to private banks, not state-owned banks, because state-owned banks are not exploitative institutions and have not been established to generate profits. Abbas Mousavian attributes this theory to [[Mohammad Hadi Marefat]].<ref>Mousavian, Financial Instruments, p. 160.</ref>
# Restricting riba to interest charged by private banks: On this basis, bank interest constitutes usury and is prohibited only when it relates to private banks, not state-owned banks, because state-owned banks are not exploitative institutions and have not been established to generate profits. Abbas Mousavian attributes this theory to [[Mohammad Hadi Marefat]].<ref>Mousavian, Financial Instruments, p. 160.</ref>
# Restricting usury to an increase charged for extending the term: According to this view, prohibited usury is money paid to a lender in return for extending the repayment period of a loan. Mohammad Rashid Rida expressed this view in “Tafsir al-Manar” under Verse 130 of Sura Al Imran and in the “book al-Riba wa-l-Mu‘amalat fi al-Islam.” Interest charged in modern banking does not possess this characteristic.<ref>Mousavian, Financial Instruments, pp. 150-164.</ref>
# Restricting riba to instances where the repayment period is extended: According to this view, prohibited usury is money paid to a lender in return for extending the repayment period of a loan. Mohammad Rashid Rida expressed this view in “Tafsir al-Manar” under Verse 130 of Sura Al Imran and in the book “al-Riba wa-l-Mu‘amalat fi al-Islam.” Interest charged in modern banking does not fall under this category.<ref>Mousavian, Financial Instruments, pp. 150-164.</ref>


In rejecting these theories, Mousavian maintains that engagement in genuine transactions must be regarded as the principal means of earning profit and that new transactions arising from the expansion of the banking system must be carefully examined to ensure that they are free of every form of loan-based and transactional usury.<ref>Mousavian, Financial Instruments, pp. 150-164.</ref>
Rejecting these theories, Mousavian maintains that the principal means of earning profit is genuine transactions and that any new transactions resulting from the expansion of the banking system must be rigorously scrutinized to ensure they are free from usury, whether in the form of loans or trade.<ref>Mousavian, Financial Instruments, pp. 150-164.</ref>


=== '''Distinguishing Permissible and Impermissible Stratagems for Circumventing Usury''' ===
=== Distinguishing Permissible and Impermissible Stratagems for Circumventing Usury ===
Mousavian divided stratagems for circumventing usury into permissible and impermissible stratagems. According to him, the criterion for impermissible stratagems is the absence of a genuine intention to undertake the alternative transaction or the applicability of usury to the stratagem despite the existence of a genuine intention. He maintained that this distinction depends largely on the parties’ intentions. In contrast, he classified spot and deferred sales, as well as the leasing of fixed assets, among permissible stratagems. He maintained that, in many transactions, because of the prohibition of usury, the parties genuinely intend to enter into permissible transactions.<ref>Mousavian, Financial Instruments, pp. 164-187.</ref>
Mousavian divided stratagems for circumventing usury into permissible and impermissible. According to him, the criterion for stratagems are impermissible where there is no genuine intention to undertake the alternative transaction or the circumventing act is really usury though the parties have a genuine intention. He maintained that this distinction depends mainly on the parties’ intentions. In contrast, he classified spot and deferred sales, as well as the leasing of fixed assets, among permissible stratagems. In many transactions, he believed, the parties genuinely intend to make permissible transactions to avoid prohibited usury.<ref>Mousavian, Financial Instruments, pp. 164-187.</ref>


== Securities from Mousavian’s Perspective ==
== Securities from Mousavian’s Perspective ==
Abbas Mousavian accepted several financial instruments, such as [[qard al-hasan securities]],<ref>Mousavian, Islamic Financial Instruments, pp. 347-354.</ref> [[murabaha securities]] (in some of their forms),<ref>Mousavian, Islamic Financial Instruments, pp. 359-361.</ref> and lease securities<ref>Mousavian, Islamic Financial Instruments, pp. 372-374.</ref> as Islamic financial instruments. He regarded these securities as appropriate alternatives to [[bonds]] and [[preferred shares]]—which are generally based on interest.<ref>Mousavian, Islamic Financial Instruments, p. 345.</ref>
Abbas Mousavian recognized several financial instruments as Islamic financial instruments, including [[qard al-hasan securities]],<ref>Mousavian, Islamic Financial Instruments, pp. 347-354.</ref> [[murabaha securities]] (in some types),<ref>Mousavian, Islamic Financial Instruments, pp. 359-361.</ref> and lease securities<ref>Mousavian, Islamic Financial Instruments, pp. 372-374.</ref> He regarded these securities as purposive alternatives to [[bonds]] and [[preferred shares]] which are typically interest-based.<ref>Mousavian, Islamic Financial Instruments, p. 345.</ref>


=== Bonds ===
=== Bonds ===
Abbas Mousavian divides bonds into four categories (interest-bearing bonds, income bonds, prize bonds, and discount bonds). For each category, he reports and critiques the jurisprudential opinions of jurists and marjas, with most of the discussion concerning loans, usury, and the foundations of their prohibition.<ref>Mousavian, Islamic Capital Market, pp. 364-370.</ref> According to Mousavian, none of the justifications for considering various types of bonds permissible possesses a jurisprudential foundation; according to the definition of usury, every loan in which an increase is stipulated and the borrower undertakes to pay that increase constitutes usury and is prohibited.<ref>Mousavian, Islamic Capital Market, pp. 366-370.</ref>
Abbas Mousavian divides bonds into four categories: interest-bearing bonds, income bonds, prize bonds, and discount bonds. He provided a critical analysis of the jurists' perspectives on these categories, focusing primarily on loans, usury, and the underlying rationales for their prohibition.<ref>Mousavian, Islamic Capital Market, pp. 364-370.</ref> Mousavian maintained that none of the ideas offered to justify various types of bonds in terms of Sharia have a jurisprudential foundation; according to the definition of usury, every loan in which an increase is stipulated and the borrower undertakes to pay that increase constitutes usury and is prohibited.<ref>Mousavian, Islamic Capital Market, pp. 366-370.</ref>


=== Murabaha Securities ===
=== Murabaha Securities ===
According to Mousavian, murabaha is a type of sale (purchase and sale) that, when structured as securities, represents the owner’s debt to the holder of the security.<ref>Mousavian, Islamic Financial Instruments (Sukuk), p. 355.</ref> Mousavian regards murabaha as legitimate in Imami jurisprudence and based on a narration from the sixth Imam of the Shia.<ref>Mousavian, “The Application of Murabaha in Interest-Free Banking,” p. 38; Kulayni, al-Kafi, 1407 AH, vol. 5, p. 201.</ref> According to Mousavian, trading murabaha securities includes transactions other than the murabaha sale; after examination, it appears that Shia jurists have regarded the purchase and sale of these securities as valid under certain assumptions.<ref>Mousavian, Islamic Financial Instruments (Sukuk), pp. 359-360.</ref>
According to Mousavian, murabaha is a type of sale (purchase and sale) that in form of securities represents the owner’s debt to the holder of the security.<ref>Mousavian, Islamic Financial Instruments (Sukuk), p. 355.</ref> Mousavian regards murabaha as legitimate in Imami jurisprudence that based on a hadith of the sixth Imam of the Shia.<ref>Mousavian, “The Application of Murabaha in Interest-Free Banking,” p. 38; Kulayni, al-Kafi, 1407 AH, vol. 5, p. 201.</ref> According to Mousavian, trading murabaha securities includes transactions other than the murabaha sale; Shia jurists seem to consider certain transactions of these securities to be valid.<ref>Mousavian, Islamic Financial Instruments (Sukuk), pp. 359-360.</ref>


=== Ordinary Shares ===
=== Ordinary Shares ===
According to Mousavian, shares are a new phenomenon with no precedent in jurisprudential texts and constitute one of the newly arising issues.<ref>Mousavian, Islamic Capital Market, pp. 387-399.</ref> Mousavian maintains that, provided the activities of public joint-stock companies concern legitimate subjects and are conducted in accordance with religious standards, the establishment of such companies and their operation within the framework of specific laws and regulations present no jurisprudential problem.<ref>Mousavian, Islamic Capital Market, p. 399.</ref>
According to Mousavian, shares are a new phenomenon with no precedent in jurisprudential texts and constitute one of the newly emerged issues.<ref>Mousavian, Islamic Capital Market, pp. 387-399.</ref> Mousavian maintains that the establishment of public companies and their activities within the framework of specific laws and regulations have no jurisprudential prohibition provided their activities concern legitimate subjects and are conducted in accordance with religious standards.<ref>Mousavian, Islamic Capital Market, p. 399.</ref>


=== Preferred Shares ===
=== Preferred Shares ===
Seyed Abbas Mousavian maintains that certain preferred shares present no jurisprudential problem, while others are prohibited. He regards “non-cumulative fixed-dividend preferred shares” and “non-cumulative participating preferred shares” as permissible, while considering “cumulative fixed-dividend preferred shares,” “cumulative participating preferred shares,” and “floating-rate preferred shares” to be instances of impermissible stratagems and usury.<ref>Mousavian, Islamic Capital Market, p. 415.</ref>
Seyed Abbas Mousavian maintains that certain preferred shares have no jurisprudential prohibition, while others are prohibited. According to him, “non-cumulative fixed-dividend preferred shares” and “non-cumulative participating preferred shares” are permissible, but “cumulative fixed-dividend preferred shares,” “cumulative participating preferred shares,” and “floating-rate preferred shares” are instances of impermissible stratagems and usury.<ref>Mousavian, Islamic Capital Market, p. 415.</ref>


== Internal Links ==
== Internal Links ==
Summaries of several books by Seyed Abbas Mousavian have been written in the [[Encyclopedia of Contemporary Jurisprudence]]:
Summaries of several books by Seyed Abbas Mousavian have been written in the [[The Contemporary Jurisprudence Encyclopedia|Encyclopedia of Contemporary Jurisprudence]]:


* [[Foundations of Islamic Finance (book)|Foundations of Islamic Finance]]
* [[Foundations of Islamic Finance (book)|Foundations of Islamic Finance]]

Latest revision as of 18:04, 16 October 2026

Author: Reza Shams
NameSeyed Abbas Mousavian
Age1339 SH
PositionAuthority on Islamic banking, member of the Board of Trustees of Imam Sadiq University (a)
NationalityIranian
Works in contemporary jurisprudenceInterest-Free Banking: From Theory to Practice • Islamic Capital Market • Other books by Mousavian
  • Abstract

Seyed Abbas Mousavian (1339 SH–1399 SH/2020 AD) was a Shia economist, a theorist on Islamic banking, and a member of the Jurisprudential Council of the Central Bank of the Islamic Republic of Iran. Mousavian is regarded as influential figure in financial laws regulations of Iran.

He authored numerous scholarly works on Islamic banking and Islamic financial instruments, including the books Foundations of Islamic Finance, Islamic Capital Market, Stock Speculation from the Perspective of the Sharia, Jurisprudential Foundations of the Money and Capital Markets, Islamic Banking: Theoretical Foundations and Practical Experiences, and Islamic Financial Instruments (Sukuk).

Mousavian’s views on Islamic banking include: 1. The use of exchange-based contracts (banking contracts with fixed returns) and their important role in Islamic banking; 2. The superiority of the Islam-centered method over the jurisprudence-centered method in Islamic banking; 3. The permissibility of the penalty for delayed repayment of loan installments.

According to Mousavian, there are three conception in Islamic economics: the “Islamic economic system,” the “Islamic financial system,” and “economic jurisprudence.” The objective of the Islamic economic system is to establish public welfare. He regarded the Islamic financial system as a subsystem of the Islamic economic system whose purpose is financing (through the creation of Islamic financial instruments) and reducing the risk involved in transactions. In his view, economic jurisprudence is responsible for deducing prescriptive rulings (such as the ruling on usury) or declaratory rulings (such as the transfer of ownership) concerning financial and economic conduct and relations.

Abbas Mousavian recognized certain financial instruments as Islamic financial instruments, including certain types of qard al-hasan securities, murabaha securities, and lease securities. He regarded these securities as appropriate alternatives to bonds and preferred shares which are generally based on interest (usury).

With the aim of making and using Islamic financial instruments, Mousavian maintained that matters such as the conformity of securities with the standards of the Sharia and Imami jurisprudence, the accounting issues related to securities, the micro- and macroeconomic effects, and the risk involved in trading securities must be considered. He also paid attention to the legitimacy and acceptability of financial instruments at the international and interdenominational levels.

Introduction

Seyed Abbas Mousavian was a graduate of the Qom Seminary, an expert in economic jurisprudence, and a theorist on Islamic banking and finance. On the occasion of Mousavian’s death, jurists such as Seyed Ali Khamenei, Sadeq Amoli Larijani, Alireza Arafi, Ahmad Moballeghi, and Ali Akbar Rashad praised his knowledge of economic jurisprudence in their messages.[1] According to Mohammad Javad Tavakkoli, associate professor in the Department of Economics at the Imam Khomeini Institute, Mousavian adopted an applied approach to issues of Islamic economics and influenced the procedure of certain laws in this field. Some areas influenced by him are as follows:

  1. The Banking System reform Plan; influential in the Fifth Development Plan Law.
  2. The lease securities or sukuk plan for the Securities and Exchange Organization; it prepared the ground for the issuance of banking sukuk under the Fifth Development Plan Law.
  3. The design of various forms of sukuk for the securities exchange and the amendment of certain laws governing this exchange.[2]

Mousavian produced more than one hundred works in the field of Islamic economics, both individually and collaboratively.[3] His individually authored works include the books Islamic Banking: Theoretical Foundations and Practical Experiences, Islamic Financial Instruments (Sukuk), and Islamic Capital Market.[4] Mousavian received several awards, including the World Award for Islamic Humanities and the Sadr world Award.[5]

Mousavian held numerous executive positions and responsibilities, including:

Biography

Seyed Abbas Mousavian was born on 2. Khordad 1339 SH (23. may 1960) in Ajabshir in East Azerbaijan Province.[7] In 1360 SH, amid Cultural Revolution in Iran, he withdrew from university and began studying religious sciences at the Qom Seminary.[8] He was studying advanced courses in Fiqh and Usul al-Fiqh for ten years (1368-1378 SH).[9] In 1384 SH, Mousavian defended his Level Four seminary dissertation in economic jurisprudence, entitled “The Jurisprudential Rulings of Securities.”[10] In addition to his seminary studies, he pursued a master's degree in theoretical economics at Shahid Beheshti University.[11]

General Foundations in Islamic Economic Research

Some of Seyed Abbas Mousavian’s foundational views concerning Islamic economics are as follows:

Distinction between the Islamic Economic System, the Islamic Financial System, and Economic Fiqh

According to Mousavian, there are three distinct concepts in Islamic economics literature: “Islamic economic system,” “Islamic financial system,” and “economic Fiqh.”

  • Islamic economic system is a system intended to establish public welfare on the basis of Islamic principles. According to Mousavian, to achieve public welfare as its ultimate objective, the Islamic economic system requires three intermediate objectives: economic justice, economic security, and economic growth and development.[12]
  • Islamic financial system is a subsystem of the Islamic economic system responsible for financing (through the creation of Islamic financial instruments) and reducing the risk involved in transactions.[13]
  • Economic Fiqh explains the rulings governing property and the related issues in the three fields of production, distribution, and consumption; this discipline includes deducing prescriptive rulings (such as the ruling on Riba) or declaratory rulings (such as the transfer of property) on financial and economic conduct and relations.[14]

On this basis, in the book Foundations of Islamic Finance, Mousavian establishes four key fundamental components for Islamic economic system and its associated subsystems:

  1. Islamic doctrinal and theological foundations, including fundamental Islamic worldviews concerning God, existence (being), humanity, and society.
  2. divine traditions that affect positively or negatively on human societies, based on felicity and proximity to God or wretchedness and remoteness from Him; such as the effect of taqwa (piety) and shokr (praise to God) on the economic life of Islamic societies.[15]
  3. Economic ethics, defined in three areas: the relationship between human being and God, the relationship between human being and property, and the relationship between human being and other human beings. The bases of this moral system are immaterial causality and divine traditions that affect on the livelihood of individuals and society through immaterial means Immeasurable in material terms. Ethical economic conduct (regardless of the legal framework and principles) contributes to the overarching objectives of the Islamic economic system. These aim and result functions and outcomes such as poverty alleviation, development, security, and economic justice.[16] According to Mousavian, the recommended rulings fall under the category of economic ethics, though they are discussed in Fiqh.[17]
  4. Economic Fiqh, which encompasses rulings governing conduct and relationships concerning property in the three areas of production, distribution, and consumption. These rulings direct individuals’ economic activities toward the objectives of the Islamic economic system. [18]

Foundations of Financial Instruments (Sukuk or Securities) According to Mousavian

Mousavian identified several key factors essential for the development and implementation of Islamic financial instruments:

  1. Financial instruments must be defined and regulated in terms of standards of the Sharia and Imami jurisprudence.[19]
  2. Beyond religious criteria and legal requirements and frameworks, factors such as accounting issues and trading risks must also be evaluated.[20]
  3. Legitimacy and acceptability of these financial instruments, internationally and interdenominationally, are important and must be considered in such a way that these instruments are recognized as internationally legitimate and acceptable.[21]
  4. The economic foundations of financial instruments must be taken into account. These are not the principles and criteria Sharia has prescribed for transactions. For example, in addition to the religious conditions and rulings governing leases, lease securities must be complied with other criteria to be efficient financial instruments. These criteria may be of those are considered in microeconomics or of those considered in macroeconomics. In microeconomics, say, these are must be observed: 1. Liquidity: the capacity of financial instruments to be liquidated and rapidly converted into money. 2. Efficiency: the relative superiority of certain financial instruments over similar instruments in fulfilling customers’ objectives and motivations. In macroeconomics also criteria such as financial instrument’s alignment with economic growth and justice must be observed.[22]

Using the Methods and Instruments of Conventional Economics in Islamic Economics

Mousavian maintains that methods and approaches developed within the conventional economic system are not incompatible with the Islamic economic system. According to him, these methods can be modified within the framework of the Islamic economic system and incorporated into the issues of Islamic economics.[23]

Mousavian’s Views on Islamic Banking

Mousavian held several views on Islamic banking, including:

The Importance of Trade-based Contracts in Islamic Banking Compared with Equity-based Partnership Contracts

It is said that Mousavian emphasized the application of equity-based partnership contracts (contracts without a fixed rate of return and based on profit and loss) in his earlier thought,[24] but later (for example, in the book “Islamic Banking” that is one of his latest books) he regarded trade-based contracts, such as murabaha, as contracts supported strongly by hadiths and being effective in Islamic banking which are more useful than partnership contracts.[25]

Permissibility of Penalties for Delayed Payment

According to Seyed Abbas Mousavian, delayed payment penalty is a means of reducing losses resulting from delayed payment of debts. He maintains that failure to pay debts on time leads to a reduction in deferred transactions, the erosion of public trust, a reduction in qard al-hasan (benevolent lending), Increasing the burden of bail and guarantees, and a decrease in financial exchanges.[26]

Superiority of the Islam-based Method over the Fiqh-based Method

Banking issues and financial instruments could be evaluated by Fiqh-based method. This method aims to ensure that banking methods or financial instruments do not conflict with Islamic jurisprudential rulings. On the other hand, Mousavian proposed Islam-based instead of Fiqh-based method. Islam-based method adopts a systemic and multidimensional approach to human conduct and interactions. Some researchers in economic Fiqh have regarded Mousavian’s theory as a movement toward the development of knowledge in this field.[27]

Explanation of the Fiqh-based Method

Fiqh-based method has two stages: jurisprudential analysis of an issue (it may be called jurisprudentialization) and establishment of a jurisprudential entity or institution; therefore the conformity with Fiqh is established as a criterion for Islamic banking. Mousavian maintained that, at the jurisprudential analysis stage, financial institutions are evaluated and reconstructed on the basis of Islamic jurisprudence through an approach based on the presumption of validity. According to Mousavian, at the establishment stage, a new model based on Shia jurisprudence is presented or reproduced for financial institutions and instruments that have no precedent in conventional economics.[28]

Explanation of the Islam-based Method and Its Superiority

Islam-based method uses all Islamic sources instead of being content with Fiqh alone; the Islamic sources includ moral judgments, jurisprudence, divine traditions, and the objectives and principles of Islam. Ghafouri and Mirmoezzi, researchers in Islamic jurisprudence, state that a study of Mousavian’s works shows that he considered ethical principles or divine traditions in constructing an economic system. They cited the article “Religion and Economics” and the article “Introduction the Islamic Economic System” for their calim.[29]

As these researchers state, this method also Mousavian posits two stages just as in the Fiqh-based method: Islamization and establishment of an Islamic entity or institution. Islamization means examining and reconstructing the conventional economic models on the basis of all Islamic sources, including moral judgment, jurisprudence, divine traditions, and the objectives and principles of Islam. The establishment stage means presenting a new economic model based on these criteria.[30]

The superiority of the Islam-based method over the Fiqh-based method lies in the fact that Fiqh does not encompass all various Islamic teachings in all areas, because there is no necessary correspondence between jurisprudential knowledge and the Preserved Tablet, as jurisprudential deduction is a process based on conjecture and ijtihad. Accordingly, a model involving financial institutions and instruments may not conflict with jurisprudential teachings but still contradicting the core foundations of Sharia, such as justice, security, and freedom.[31]

No Distinction between Bank Interest and riba

Mousavian consideres the distinction between bank interest and riba to be invalid, arguing that these are the same thing.[32] Mousavian points out some things:

  1. Riba as an necessary component of the economy of today's world: nowadays, according to this theory, bank interest or riba is necessary for economic development and plays an effective role, therefore pursuant to the maxim “necessities permit prohibitions” (al-darurat tubih al-mahzurat), rulings are relaxed in circumstances of harm.[33]
  2. Restricting riba to interest charged by private banks: On this basis, bank interest constitutes usury and is prohibited only when it relates to private banks, not state-owned banks, because state-owned banks are not exploitative institutions and have not been established to generate profits. Abbas Mousavian attributes this theory to Mohammad Hadi Marefat.[34]
  3. Restricting riba to instances where the repayment period is extended: According to this view, prohibited usury is money paid to a lender in return for extending the repayment period of a loan. Mohammad Rashid Rida expressed this view in “Tafsir al-Manar” under Verse 130 of Sura Al Imran and in the book “al-Riba wa-l-Mu‘amalat fi al-Islam.” Interest charged in modern banking does not fall under this category.[35]

Rejecting these theories, Mousavian maintains that the principal means of earning profit is genuine transactions and that any new transactions resulting from the expansion of the banking system must be rigorously scrutinized to ensure they are free from usury, whether in the form of loans or trade.[36]

Distinguishing Permissible and Impermissible Stratagems for Circumventing Usury

Mousavian divided stratagems for circumventing usury into permissible and impermissible. According to him, the criterion for stratagems are impermissible where there is no genuine intention to undertake the alternative transaction or the circumventing act is really usury though the parties have a genuine intention. He maintained that this distinction depends mainly on the parties’ intentions. In contrast, he classified spot and deferred sales, as well as the leasing of fixed assets, among permissible stratagems. In many transactions, he believed, the parties genuinely intend to make permissible transactions to avoid prohibited usury.[37]

Securities from Mousavian’s Perspective

Abbas Mousavian recognized several financial instruments as Islamic financial instruments, including qard al-hasan securities,[38] murabaha securities (in some types),[39] and lease securities[40] He regarded these securities as purposive alternatives to bonds and preferred shares which are typically interest-based.[41]

Bonds

Abbas Mousavian divides bonds into four categories: interest-bearing bonds, income bonds, prize bonds, and discount bonds. He provided a critical analysis of the jurists' perspectives on these categories, focusing primarily on loans, usury, and the underlying rationales for their prohibition.[42] Mousavian maintained that none of the ideas offered to justify various types of bonds in terms of Sharia have a jurisprudential foundation; according to the definition of usury, every loan in which an increase is stipulated and the borrower undertakes to pay that increase constitutes usury and is prohibited.[43]

Murabaha Securities

According to Mousavian, murabaha is a type of sale (purchase and sale) that in form of securities represents the owner’s debt to the holder of the security.[44] Mousavian regards murabaha as legitimate in Imami jurisprudence that based on a hadith of the sixth Imam of the Shia.[45] According to Mousavian, trading murabaha securities includes transactions other than the murabaha sale; Shia jurists seem to consider certain transactions of these securities to be valid.[46]

Ordinary Shares

According to Mousavian, shares are a new phenomenon with no precedent in jurisprudential texts and constitute one of the newly emerged issues.[47] Mousavian maintains that the establishment of public companies and their activities within the framework of specific laws and regulations have no jurisprudential prohibition provided their activities concern legitimate subjects and are conducted in accordance with religious standards.[48]

Preferred Shares

Seyed Abbas Mousavian maintains that certain preferred shares have no jurisprudential prohibition, while others are prohibited. According to him, “non-cumulative fixed-dividend preferred shares” and “non-cumulative participating preferred shares” are permissible, but “cumulative fixed-dividend preferred shares,” “cumulative participating preferred shares,” and “floating-rate preferred shares” are instances of impermissible stratagems and usury.[49]

Internal Links

Summaries of several books by Seyed Abbas Mousavian have been written in the Encyclopedia of Contemporary Jurisprudence:

Footnotes

  1. ↑ “Selections from the Numerous Messages of Condolence,” website of the Monetary and Banking Research Institute of the Central Bank of the Islamic Republic of Iran.
  2. ↑ “Seyed Abbas Mousavian: Discourses and Interviews,” pp. 302-303.
  3. ↑ “An Overview of the Life and Activities of the Late Hujjat al-Islam wa-l-Muslimin Seyed Abbas Mousavian,” pp. 277-278.
  4. ↑ “An Overview of the Life and Activities of the Late Hujjat al-Islam wa-l-Muslimin Seyed Abbas Mousavian,” pp. 277-278.
  5. ↑ “An Overview of the Life and Activities of the Late Hujjat al-Islam wa-l-Muslimin Seyed Abbas Mousavian,” pp. 277-278.
  6. ↑ “An Overview of the Life and Activities of the Late Hujjat al-Islam wa-l-Muslimin Seyed Abbas Mousavian,” pp. 277-278.
  7. ↑ “Biography of Hujjat al-Islam wa-l-Muslimin Seyed Abbas Mousavian,” Ijtihad Network website.
  8. ↑ “An Overview of the Life and Activities of the Late Hujjat al-Islam wa-l-Muslimin Seyed Abbas Mousavian,” p. 278.
  9. ↑ “An Overview of the Life and Activities of the Late Hujjat al-Islam wa-l-Muslimin Seyed Abbas Mousavian,” p. 278.
  10. ↑ “An Overview of the Life and Activities of the Late Hujjat al-Islam wa-l-Muslimin Seyed Abbas Mousavian,” p. 278.
  11. ↑ “An Overview of the Life and Activities of the Late Hujjat al-Islam wa-l-Muslimin Seyed Abbas Mousavian,” p. 278.
  12. ↑ Mousavian and Tavhidi, Foundations of Islamic Finance, pp. 5-10.
  13. ↑ Mousavian and Tavhidi, Foundations of Islamic Finance, pp. 5-10.
  14. ↑ Mousavian and Tavhidi, Foundations of Islamic Finance, pp. 12-20.
  15. ↑ Mousavian and Tavhidi, Foundations of Islamic Finance, p. 15.
  16. ↑ Mousavian and Tavhidi, Foundations of Islamic Finance, pp. 17-19.
  17. ↑ Mousavian and Tavhidi, Foundations of Islamic Finance, p. 20.
  18. ↑ Mousavian and Tavhidi, Foundations of Islamic Finance, pp. 12-20.
  19. ↑ Mousavian and Tavhidi, Foundations of Islamic Finance, pp. 48-49.
  20. ↑ Mousavian and Tavhidi, Foundations of Islamic Finance, pp. 48-49.
  21. ↑ Mousavian and Tavhidi, Foundations of Islamic Finance, pp. 52-58.
  22. ↑ Mousavian, Islamic Financial Instruments, pp. 253-267.
  23. ↑ Mousavian, Islamic Banking, p. 29.
  24. ↑ Ghafourzadeh, “An Examination of the Development of Professor Mousavian’s Thought concerning the Position of Trade-based and Equity-based Partnership Contracts in Resource Allocation,” p. 87.
  25. ↑ Ghafourzadeh, “An Examination of the Development of Professor Mousavian’s Thought concerning the Position of Trade-based and Equity-based Partnership Contracts in Resource Allocation,” p. 88.
  26. ↑ Mousavian, “A Jurisprudential-Legal Examination of Laws concerning Penalties and Compensation for Delayed Payment in Iran,” p. 12.
  27. ↑ Mirmoezzi and Ghafouri, “The Development of Professor Mousavian’s Intellectual Method: From the Jurisprudence-Centered Method to the Islam-Centered Method,” pp. 40-58.
  28. ↑ Mirmoezzi and Ghafouri, “The Development of Professor Mousavian’s Scientific Method from the Fiqh-based Method to the Islam-Centered Method,” pp. 48-55.
  29. ↑ Mirmoezzi and Ghafouri, “The Development of Professor Mousavian’s Scientific Method from the Fiqh-based Method to the Islam-based Method,” p. 58.
  30. ↑ Mirmoezzi and Ghafouri, “The Development of Professor Mousavian’s Scientific Method from the Fiqh-based Method to the Islam-based Method,” p. 59.
  31. ↑ Mirmoezzi and Ghafouri, “The Development of Professor Mousavian’s Scientific Method from the Fiqh-based Method to the Islam-based Method,” p. 63.
  32. ↑ Mousavian and Meysami, “A Critique and Examination of New Views concerning Usury and Bank Interest,” p. 7.
  33. ↑ Mousavian, Financial Instruments, pp. 162-163.
  34. ↑ Mousavian, Financial Instruments, p. 160.
  35. ↑ Mousavian, Financial Instruments, pp. 150-164.
  36. ↑ Mousavian, Financial Instruments, pp. 150-164.
  37. ↑ Mousavian, Financial Instruments, pp. 164-187.
  38. ↑ Mousavian, Islamic Financial Instruments, pp. 347-354.
  39. ↑ Mousavian, Islamic Financial Instruments, pp. 359-361.
  40. ↑ Mousavian, Islamic Financial Instruments, pp. 372-374.
  41. ↑ Mousavian, Islamic Financial Instruments, p. 345.
  42. ↑ Mousavian, Islamic Capital Market, pp. 364-370.
  43. ↑ Mousavian, Islamic Capital Market, pp. 366-370.
  44. ↑ Mousavian, Islamic Financial Instruments (Sukuk), p. 355.
  45. ↑ Mousavian, “The Application of Murabaha in Interest-Free Banking,” p. 38; Kulayni, al-Kafi, 1407 AH, vol. 5, p. 201.
  46. ↑ Mousavian, Islamic Financial Instruments (Sukuk), pp. 359-360.
  47. ↑ Mousavian, Islamic Capital Market, pp. 387-399.
  48. ↑ Mousavian, Islamic Capital Market, p. 399.
  49. ↑ Mousavian, Islamic Capital Market, p. 415.

Sources

  • Ghafourzadeh, Hossein, “An Examination of the Development of Professor Mousavian’s Thought concerning the Position of Exchange-Based and Partnership Contracts in Resource Allocation,” Collected Articles: Commemoration of Professor Seyed Abbas Mousavian, Tehran, Islamic Research Institute for Culture and Thought Publishing Organization, 1403 SH.
  • Fazel and Nikpour, “A Critique of Professor Mousavian’s View concerning the Stages of the Legislation of the Ruling on Usury in the Quran,” Collected Articles: Commemoration of Professor Seyed Abbas Mousavian, Tehran, Islamic Research Institute for Culture and Thought Publishing Organization, 1403 SH.
  • “Selections from the Numerous Messages of Condolence”, website of the Monetary and Banking Research Institute of the Central Bank of the Islamic Republic of Iran, publication date: 20 Mordad 1399 SH, access date: 3 Esfand 1404 SH.
  • “Mousavian: Jurist-Economist and Distinguished Professor of Finance”, website of the Monetary and Banking Research Institute; access date: 1404/11/15 SH.
  • Mousavian, Seyed Abbas, Islamic Financial Instruments (Sukuk), Tehran, Islamic Research Institute for Culture and Thought Publishing Organization, 15th ed., 1402 SH.
  • Mousavian, Seyed Abbas, and Mohammad Tavhidi, Foundations of Islamic Finance, Tehran, Imam Sadiq University Press (a), 1402 SH.
  • Mousavian, Seyed Abbas, Islamic Capital Market, Tehran, Islamic Research Institute for Culture and Thought, 1391 SH.
  • Mirmoezzi, Seyed Hossein, and Hossein Ghafourzadeh, “The Development of Professor Mousavian’s Intellectual Method: From the Jurisprudence-Centered Method to the Islam-Centered Method,” Collected Articles: Commemoration of Professor Seyed Abbas Mousavian, Tehran, Islamic Research Institute for Culture and Thought Publishing Organization, 1403 SH.
  • Yousefi, Ahmad, Collected Articles: Commemoration of Professor Seyed Abbas Mousavian, Tehran, Islamic Research Institute for Culture and Thought Publishing Organization, 1403 SH.
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