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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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Bullish KFH Says its House is in Good Order
Islamic Banker, No. 69, October 2001, 6-7
Mushtak Parker
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Proposal For An Integrated Marketing Model Of Musharakah
- By Al—Harean
Financing To Help Disadvanteged Fishing People in Malaysia
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Islamic Banking Windows
- By Justice Mohammed Taqi Usmani
New Horizon, No. 119, May 2002, 3-5
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Towards Islamic Banking: The Malaysian Experience
- By Rustam Idris
New Horizon, 30 & 31, Aug. 94, Sept. 94, 9
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The Effects of Conventional Interest Rates and Rate of Profit on fund deposited with Islamic Banking System in Malaysia
- By Dr. Sudin Haron & Norafifah Ahmad
International Journal of Islamic Financial Services, Volume: 1, Issue: No. 4, Year : Jan-March 2000, Pages: 1-9
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Islamic Finance and Banking: The Challenge and Prospects
- By Khurshid Ahmad
Review of Islamic Economics, No9, 2000, 57-82
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