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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.
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The Characteristics Of Islamic Banking
Islam in Transition: Muslim Perspectives, New York, Oxford University Press, 1982, pages: 210-216.
Ayatullah Mahmud Taliqani, Authors/editors: John J. Donohue and John L. Esposito
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Islamic Banking: An Evaluation
- By Syed Nawab Haider Naqvi
Institute for Development Research, 10, Nazimuddin Road, F-ll/4
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Islamic Banking
- By Mohamed Ariff
Islamic Business and Finance Homepage
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Islamic Banking
- By A.L.M. Abdul Gafoor
Source Title: http://users.bart.n1/~Abdul/Book4.Html
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IDB: Islamic Banking: Going Strong
- By Staff Report
Impact International, Volume:27, Issue: No4, April 1997, 38-39
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Islamic Banking: Rising Appeal for Lenders and Borrowers
- By Staff Writer
Journal of Islamic Banking Finance, 11, No 2, April - June 1994, 50-57
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