Document Type


Publication Date



Why was economic development retarded in the Middle East relative to Western Europe, despite the Middle East being far ahead for centuries? A theoretical model inspired and substantiated by the history of interest restrictions suggests that this outcome emanates in part from the greater degree to which early Islamic political authorities derived legitimacy from religious authorities. This entailed a feedback mechanism in Europe in which the rise of commerce led to the relaxation of interest restrictions while also diminishing the Church's ability to legitimise political authorities. These interactions did not occur in the Islamic world despite equally amenable economic conditions.


This is the accepted version of the following article:

Rubin, Jared. "Institutions, the Rise of Commerce and the Persistence of Laws: Interest Restrictions in Islam and Christianity*." The Economic Journal 121.557 (2011): 1310-1339.

which has been published in final form at DOI: 10.1111/j.1468-0297.2011.02456.x.

Peer Reviewed






To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.