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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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Back to Basics for Islamic Banking Seminars
New Horizon - Islamic Banking and Insurance, N0.29, July 1994, 17-20
Naomi Collett
Source Title: Three conferences organised across the globe this year have... Read More |
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The Role of Central Banks in Islamic Banking
- By Prof Iraj Toutounchian
New Horizon, Issue No. 20, June 2002, pg 8-13
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Financing Infrastructure Building: Role Of Islamic Financial Institutions
- By Muhammad Nejatullah Siddiqi
Seminar on Cooperation Between Government and the Private Sector in Financing Economic Projects
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Experiments in Islamic Banking
- By Salim Chishti, Author/Editor: Zaman, Mukhtar
Banking and Finance: Islamic Concept, Karachi, International Association of Islamic Banks (Asian Region), 1993, pages: 128-138.
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The Characteristics Of Islamic Banking
- By Ayatullah Mahmud Taliqani, Authors/editors: John J. Donohue and John L. Esposito
Islam in Transition: Muslim Perspectives, New York, Oxford University Press, 1982, pages: 210-216.
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The Evolution of Islamic Banking
- By Ansaf Ahmed
Encyclopedia of Islamic Banking and Insurance, London, Institute of Islamic Banking and Insurance, 1995, pages: 15-30
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| Islamic Banking—The Jordanian Experience
Arab Law Quarterly, 2, Part 3, August 1987, 207-229 Read
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| Geniza: The Unfolding Truth
Mohammed Imad Ali: In the mirror of history were the earlier generations smarter or are we? Read More
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| Islamic Discipline of Economics Emerged in late-colonial India
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