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

Malaysia’s Interest Free Counters: No Room for Religious Sentiments
Islamic Banker, Issue 8, August 1996, 13-15
Staff writer

Without the so-called interest-free... Read More

Report on the Third Orientation and Training Course in Islamic Economics, Banking and Finance
- By Staff writer
Islamic Economic Studies,Vol: 3, Issue: 2, June 1996, 95-97
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Malaysia’s Interest Free Counters: No Room for Religious Sentiments
- By Staff writer
Islamic Banker, Issue 8, August 1996, 13-15
Read more

Divine Banking System
- By Al-Haj Abdul Jabbar Khan, President Habib Bank Ltd.
Journal of Islamic Banking and Finance,Volume – 1, No1, winter 1984, 29-49
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