An Adjusted Classical Models For Interest-free Financing in Nigeria.

This paper examines an interest-free macroeconomic models by adjusting the classical model into an interest-free macroeconomic model as a basis for developing a comparative analysis, The study adopted a descriptive approach by describing the mechanics for obtaining an interest-free macroeconomic model from a prototype western model. It was observed that most Muslims in Nigeria are interested in adopting interest free financing under the western system. This is a reason for converting a western model into an interest-free model.This conversion allows policy-makers to gain useful insight in the process in transition from the western system to the Islamic system. The Islamic principle of prohibition of interest is incorporated into the selected model to develop a general macroeconomic system applicable for those economies in which an interest-free financial system is prevalent, such as Nigeria. It was concluded that application of western scientific tools of analysis is accepted in Islam as long as they are free of anti-lslamic elements and this has also conform with the Central Bank of Nigeria draft guidelines for regulations of interest free banking in Nigeria.