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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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Islamic Unit Trusts
Institute of Islamic Banking and Insurance; London
S.U. Hasan
In Western financial markets, the origin of Unit Trusts can be traced back to fifty years ago, though their use as financial products has taken a great leap forward during the last 10-15 years, as there has been a greater awareness of the benefits of having a diversified portfolio under... 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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| The Equate project: An introduction to Islamic Project Finance
Journal of Project Finance, Vol 5, Issue 4; New York; Winter 2000 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 Banking and Finance growth is vital: Prof. M.A. Mannan
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