Theology 101

What Does the Old Testament Say about Loans and Interest? Part 2

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For most of the history of the church, church leaders understood that the Old Testament taught a complete ban on any interest on loans. But what about loans for specific purposes, such as productive loans for business? Were those excluded as well?

As noted in my first post in this series, the subject of my study is the matter of loans to fellow Israelites who had the potential for paying the loan back, not the topic of charity to the poor.

Three important passages in the Pentateuch guide the main teaching on loans and interest in the Old Testament (the underlining is added to the passages below to highlight the key factors):

If you lend money to any of my people with you who is poor, you shall not be like a moneylender to him, and you shall not exact interest from him (Ex. 22:25).

If your brother becomes poor and cannot maintain himself with you, you shall support him as though he were a stranger and a sojourner, and he shall live with you. Take no interest from him or profit, but fear your God, that your brother may live beside you. You shall not lend him your money at interest, nor give him your food for profit (Lev. 25:35-37).

You shall not charge interest on loans to your brother, interest on money, interest on food, interest on anything that is lent for interest. You may charge a foreigner interest, but you may not charge your brother interest, that the LORD your God may bless you in all that you undertake in the land that you are entering to take possession of it (Deut. 23:19-20).

The source of the long controversy throughout much of church history was based on the difference between the first two passages, which focus the ban on interest to loans to the “poor,” whereas the Deuteronomy passage excludes interest on loans to “your brother.” In my own study of these three passages, I explored the following questions:

  1. What is the intended scope of the interest ban in Deuteronomy 23:19-20?
  2. How do these three passages relate to each other? Does the later teaching of Deuteronomy 23:19-20 differ from and override the teaching of Exodus 22:25 and Leviticus 25:35-37 (the two passages that identify the working Israelite poor as the focus on the interest ban), or do these three passages maintain some unified teaching about the topic of lending and interest?
  3. Is charging interest on any loan always wrong, or is charging interest wrong in some contexts and legitimate in other contexts, according to these three passages?
  4. Regarding Deuteronomy 23:19-20, what type of contrast is intended between “brother” (vv. 19, 20) and “foreigner” (vs. 20)?

As I looked specifically at Deuteronomy 23:19-20, I saw three possible interpretations:

1. A total interest ban on all loans.

This was the traditional view held during the Patristic period and the Middle Ages of church history. In this interpretation, Deuteronomy 23:19 is viewed as offering the last word on the matter, different from the other two Torah passages. Within the covenant of the Israelite “brotherhood” community, charging any interest on a loan is always banned—that is the ideal. Passages in the rest of the OT confirm this blanket prohibition (e.g., Ps.15, Ezek. 18:8).

In support of this view, Bruce Ballard writes,

The Old Testament clearly condemns lending money or anything else at any interest at all… If my exposition of the doctrine of usury is correct, then interest-taking is as much a sin as ever (“On the Sin of Usury: A Biblical Economic Ethic,” Christian Scholar’s Review 24 (1994): 214, 227).

2. An interest ban only on loans to fellow Israelites, but not to foreigners.

As explicitly stated in Deuteronomy 23:20, this view makes a distinction that implies a two-tiered ethic. Those within the Israelite community must hold to a higher ethic and not charge interest on loans to each other. However, charging interest on loans to non-Israelites is legitimate, since one cannot expect “foreigners” to agree to this higher ethic. In such a case, Israelites can comply with the usual business practice of that day.

In support of this view, Michael Guttman notes,

If an equal basis for trading between Israelites and foreigners was to be established it could be attained only in this way; that the restrictions of the release year and the law of interest, which were not binding on the stranger a priori, were also void for the Israelite in so far as trade with foreigners was concerned (“The Term ‘Foreigner’ (נכרי) Historically Considered,” HUCA 2 (1926): 7).

3. An interest ban only on loans to the working Israelite poor.

As explicitly stated in Exodus 22:25 and Leviticus 25:35-37, this view sees an economic distinction between the poor and the merchant. It understands the contrast between “brother” and “foreigner” not as referring to an ethnic group, but one of a contrast between two situations: between the implied poor “brother” and the “foreigner” (Deut. 23:20) as trader or merchant.

When the topic of lending is first mentioned in Deut. 15:7, the focus is loans to the poor (the passage starts off very similarly to Lev. 25:35), “If among you, one of your brothers should become poor…” Thus, when the topic of lending is picked up again in Deut. 23:19-20, the focus on the poor brother is implied. And, most Deuteronomy commentators understand the term “foreigner” in Deut. 23:20 to mean foreign trader or merchant.

Mark Biddle explains this perspective,

In fact, since most traders in the ancient Near East did business internationally, the permission to charge interest of ‘foreigners’ may be understood less as a form of ethnocentricity and more as drawing a distinction between lending to the needy in one’s community and credit as a component of commercial transactions.

Although some important differences exist among these three interpretive options for Deuteronomy 23:19-20, each view can completely agree that the Old Testament commands capable Israelites to offer interest-free loans for the working poor who need subsistence living assistance. In the next blog, we begin to look at implications for contemporary practice.

Editor’s note: Read Dr. Issler’s full article on the topic, “Lending and Interest in the OT: Examining Three Interpretations to Explain the Deuteronomy 23:19-20 Distinction in Light of the Historical Usury Debate,” published by the Journal of the Evangelical Theological Society.

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