,,, yep, that sums it up. They've yet to come up with their own Bill Boeing, Howard Hughes or even (heaven forbid), Donald Trump. Fractional reserve banking keeps a downstream serf like me in my place, but I'll stay in it if there's a choice.
Conventional European banks will vary interest rates over time in a financial instrument such as a mortgage, but in the sharia-compliant type of mortgage the amount to be paid over the entire life of the loan, 20 years or whatever, will be agreed upfront. The agreement of how the profit gets divvied up between lender and borrower is clearly stated from the outset of the transaction. Essentially the financier has to take a position at the beginning, rather than using interest rates to reflect the changing perception of risk over time.If I take out a 20 year fixed rate mortgage I know exactly how much I'll be paying over the 20 years. I know at my closing the total amount, principle plus interest, was disclosed by the bank. How is this different?