Yes exactly, its exactly the reasons you said, high risk and few assets.

> creditors bearing the risk of default. The person giving away the money is always bearing the risk, that doesn't go away. VC will bear the risk still.

With an interest bearing loan, the bank will come after the borrower's assets, seeking not just the principal, but the interest on top, until they milk them dry.

This is just one reason why lending money with interest is immoral. Read up about Islam's position on this issue if you want to learn more. It's quite eye opening, and sad that we have to live in a world that is based on fundamentally evil and corrupt financial practices.

Haven't western countries typically addressed the issue of protecting borrowers through corporate entities and bankruptcy protections?

If my company borrows money, then goes bankrupt, the lenders cannot come after my personal assets unless I've personally guaranteed the loan, or broken certain rules about mixing personal and business accounts (allowing the creditors to "pierce the corporate veil"). In personal bankruptcy, my primary residence and vehicle are protected up to a certain value, along with retirement accounts.

It certainly doesn't seem like a pleasant process, but at a theoretical level the rules generally seem fair to me. One huge problem is that people don't know the rules, a situation which I suspect lenders and debt collectors are happy to encourage. There certainly are a lot of corrupt financial practices, but I think lending money can be done fairly (at least in theory). I find other perspectives on the matter very interesting. I'll be sure to read some more about Islamic finance!

> I'll be sure to read some more about Islamic finance!

Be careful about what you read. As I mentioned in several comments here, most so called present day "Islamic finance" isn't actually Islamic. Don't let labels trick you.

I see you are representing all of Islamic jurisprudence here but somehow condemning things like sukuk?

Are they condemning sukuk? I thought sukuk was an attempt to reconcile the desirable qualities of a loan with Islamic jurisprudence surrounding finance?

So unless the commenter thought sukuk was illegitimate (I haven't seen them state this, maybe they have), wouldn't it be reasonable assume they consider sukuk acceptable?

Perhaps obviously, I'm only vaguely aware of Islamic finance, so I may be missing something basic.

*EDIT*:

I've just seen the comments where they appear to be condemning sukuk, or at least common implementations.

But it seems like their point is that they think it's simply slapping a different label on lending, which I'm inclined to agree with (especially if there are repurchase agreements and guaranteed returns).

A lot, if not most, of present day "Islamic finance" isn't compatible with Islam. They're simple relabeling of Western practices with Arabic terms, but underneath they're more or less the same. There are many Hadiths and narrations prohibiting and condemning these actions.

So ghazwa is a preferable alternative for economic growth. Gotcha. Let me know how taking potshots at NATO in Syria goes. How are you any better than Western colonialists then?

Please look up straw man fallacy: https://en.wikipedia.org/wiki/Straw_man

It's well known that many Arab governments today have been installed by the Western colonialists. It's established history. We're still living the effects of post WWII colonization and Sykes-Picot. Of course, there is blame on us too, but to deny external influence is also ignorant.