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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 Banking In The Muslim World
Journal of Islamic Banking and Finance Vol 1 Issue 2, Spring 1984
Dr. S. A. El Derwish
In the last 20 to 24 years Islamic banking has been passing from its conceptual stages to realization. There is now no longer any doubt that methods, policies and tried practices are in place that show how a complete system can function internationally, more securely and... Read More |
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The Need for an International Documentation Center for Islamic Banking and Finance
- By Dr. Abdin Ahmed Salama
New Horizon, No. 115, December-January 2002, 3-5
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Banking on Principles
- By Moin A. Siddiqi
The Middle East, 267, May 1997, 26-28
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Integrating Islamic and Western Finance
- By William G. Shephard Jr.
Global Finance, 10, No5, May 1996, pg 44-50
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Bullish KFH Says its House is in Good Order
- By Mushtak Parker
Islamic Banker, No. 69, October 2001, 6-7
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Conferences Signal Surge in worldwide Interest in Islamic Banking
- By Staff writer
New Horizon- Islamic Banking and Insurance, No. 25, March 1994, pg 13
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