Banking & Finance » Overview

Islamic banking & finance institutions would neither pay interest nor earn interest. Bank-depositor relation would be based on the depositor sharing the profit accruing as a result of the bank's profitable use of the deposits pooled together. On the asset side a number of ways were tried to earn profits including partnerships and profit-sharing (mudaraba) with businessmen. Many Islamic banks entered into business directly, buying and selling commodities, land or real estate. Experimentation soon led to what is currently the predominant form of Islamic finance. In a nutshell, the core idea behind commercial and investment banking, that of financial intermediation, is retained but the ethically repugnant practice of interest on loans is discarded. Within a short period of fifty years, the first half of which was devoted mainly to theory and model building, Islamic banking established itself as an alternative, claiming ethical superiority over conventional banking.

Featured Article

Report on the Third Orientation and Training Course in Islamic Economics, Banking and Finance
Islamic Economic Studies,Vol: 3, Issue: 2, June 1996, 95-97
Staff writer

The Islamic... Read More

Back to Basics for Islamic Banking Seminars
- By Naomi Collett
New Horizon - Islamic Banking and Insurance, N0.29, July 1994, 17-20
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Determinants Of The Financial Strategy of Islamic Banks
- By Rifaat Ahmed Abdel Karim, Amal El-Tigani Ali
Journal of Business Finance and Accounting, 1, No.2, Spring 1989, 193-212
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Islamic Banking And Finance: Another Approach
- By A.L.M. Abdul Gafoor
Revised version of a paper presented at the Islamic Hinterland Conference on Critical Debates Among Canadian Muslims, 3-5September 1999, Toronto, Canada
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