Debt-Based Economy: A Reappraisal of Prosperity and Crisis

Authors

  • Hafas Furqani Faculty of Islamic Economics and Business, Universitas Islam Negeri Ar-Raniry Banda Aceh, Indonesia.
  • Zaki Fuad Faculty of Islamic Economics and Business, Universitas Islam Negeri Ar-Raniry Banda Aceh, Indonesia.
  • Syamsul Idul Adha Faculty of Islamic Economics and Business, Universitas Islam Negeri Ar-Raniry Banda Aceh, Indonesia.
  • Awalurramadhana Faculty of Islamic Economics and Business, Universitas Islam Negeri Ar-Raniry Banda Aceh, Indonesia.

DOI:

https://doi.org/10.32479/ijefi.14168

Keywords:

Debt, economy, Economic crisis, prosperity, global

Abstract

Debt and economic activity seem to be inseparable. Debt in a society is considered as something normal in economic activities to meet various needs. The government of a country also needs external debt to overcome the problem of budget deficit in addition to providing a greater stimulus to domestic economic growth. Debt has eventually become a lifestyle and is considered as a profitable business. Therefore, credit facilities have been innovated from a simple form aimed at assisting those in need into a sophisticated financial product aimed at commercialization and profit through financial engineering. In Islamic perspective, debt is allowed within certain Shari’ah and ethical parameters. It is acknowledged that debt have both advantages and disadvantages in the economy. Debt is viewed as both a driver of prosperity and a source of economic crisis. Therefore, this paper recommends that taking debts should be in line with the ability to repay, good management and use of debt for the right purpose. In addition, debt should be made transparent to the public in order to create senses of responsibility, instituting regulating framework of supervision, and embedding it in macroeconomic policies to stimulate growth and enhance welfare.  

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Author Biographies

Zaki Fuad, Faculty of Islamic Economics and Business, Universitas Islam Negeri Ar-Raniry Banda Aceh, Indonesia.

Associate Professor at the Faculty of Islamic Economics and Business, Universitas Islam Negeri Ar-Raniry Banda Aceh, Indonesia

Syamsul Idul Adha, Faculty of Islamic Economics and Business, Universitas Islam Negeri Ar-Raniry Banda Aceh, Indonesia.

Lecturer at the Faculty of Islamic Economics and Business, Universitas Islam Negeri Ar-Raniry Banda Aceh, Indonesia

Awalurramadhana, Faculty of Islamic Economics and Business, Universitas Islam Negeri Ar-Raniry Banda Aceh, Indonesia.

Student at the Faculty of Islamic Economics and Business, Universitas Islam Negeri Ar-Raniry Banda Aceh, Indonesia

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Published

2023-03-25

How to Cite

Furqani, H., Fuad, Z., Idul Adha, S., & Awalurramadhana, A. (2023). Debt-Based Economy: A Reappraisal of Prosperity and Crisis. International Journal of Economics and Financial Issues, 13(2), 109–114. https://doi.org/10.32479/ijefi.14168

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