The Concept of Interest: Meaning and History

Abstract

The chapter presents the literal meaning of the word interest and the changes in it throughout history and scrutinizes its ascribed meaning as an economics term in aspects of definitions made by several scholars, various breakdowns that ease to handle the issue, and the determinants on which the interest rate depends. It notes that the word interest implies the net and real interest in this book. It reviews the history of interest in Mesopotamia, Ancient India, Ancient Greece, Ancient Rome, Byzantium, and Medieval Europe, in terms of the perceptions of people, practiced rates, regulations made, and the enforcement tools of defaulted loans. In particular, the chapter asserts that, since the Abrahamic religions, Judaism, Christianity, and Islam strictly intervened in the practice of interest-based transactions, considering their approach to the issue is essential in comprehending how the perception of interest and its applications evolved to present conception.