Islamic Banking And Conventional Banking

Islamic Banking And Conventional Banking
Content
Part One
1.Introduction
2.Study areas
3.Methods of the study
4.Data collection methods
5.Important of the study
6.Key estimated learning from the study
Part two
7.What is Islamic Banking
8.What are the transaction process of Islamic banking
9.The key sources of law and values of Islamic Banking
10.The differences between Islamic Banking and conventional Banking
Part three
11.A comparative analysis
12.Conclusion
Basic differencess:
Results indicate that conventional banks perform better in profitability, while Islamic banks perform better in liquidity and credit risk. In t–test of the
return on asset (ROA) and total equity to net loans, there are no major difference between Islamic banks and non–Islamic banks. In the return on equity
and common equity to total assets, there are statistically significant differences in these two groups. The statistically significant difference was shown
in the area of liquidity which means that the Islamic banks liquidity performance has major difference with the non–Islamic banks.
In general, Islamic banking system is based on SharД«'ah principle, while non–Islamic banking system is based on interest rate. SharД«'ah is a set of
norms, values and laws that go to make up the Islamic way of life. Characteristics of SharД«'ah –compliant banking and financial system are free from

riba. Riba is prohibited in Islamic banking system, because Islamic banking system is based on the sharing of risk and profit. Interest is
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Abstract
The rising of the Islamic banking and finance industry is a direct response to the growing awareness amongst Muslim regarding the need of alternative
financial products and services that is complied with the teaching of Islam. To be specifically, the demand is based on the avoidance of the element of
Riba which is widely and fundamentally practiced in the conventional banking industry. The attempt by the Islamic banking and finance industry had so
far been successful and it could be witnessed by the launching of wide range of Shariah compliant financial products and transaction. However, none of
us can guarantee that the Shariah compliant products approved are fault–free absolutely. Among the practices of the industry, the
...show more content...
CURRENT PRACTICE IN THE INDUSTRY
In Malaysia, the practice of Inah may take 2 names, depending on the original owner of the asset. If the asset to be used belongs to the customer, the
contract is known as Bay Bithaman Ajil (BBA). If the asset belongs to the bank, then the contract will be named as Bay al–Inah. even though the legal
documents may differ from one financing to the another, but the common documentation will consist of Property Purchase Agreement (PPA) and
Property Sale Agreement (PSA). Besides, the Master Facility Agreement will also be prepared to encapsulate and detail out all necessary ingredients of
the facility granted. These documents reveals that though the two sale contracts are executed separately without making one of them conditional to the
other, the master facility Agreement has clearly indicated the intention of the parties in entering into these two consecutive sale contracts.
LEGITIMACY OF BAY AL–INAH The main proponents of Bay al–Inah is the Shafii school. The Shafii jurists have illustrate their permissibility in a
situation whereby a person sells a commodity on cash or credit terms and hands over possession, and the parties separate with mutual pleasure about
the contract, it is permissible for him to purchase it from the previous buyer for an amount equal to, higher, or lower than the former price, of the same
currency as before or different, paying cash or

Advantages Of Islamic Banking
1.0Overview
Islamic banking refers to a system of banking that complies with Islamic law, also known as Shariah law. The underlying principles that govern
Islamic banking are mutual risk and profit sharing between the provider of capital (investor) and the user of funds (entrepreneur). In other words, it
ensures an equal contribution for all parties involved, whether in profitability or in case of any loss occurred. Activities that involve interest (riba),
gambling (maisir) and speculative trading (gharar) are prohibited (Bank Negara Malaysia, 2010). Islamic banking is interest free banking; making it
compulsory to take active part in business profit and loss sharing. Islamic banks prefer to take less risk (Shaikh & Jalbani, 2009)
Global Islamic banking continues to be an exciting growth story characterized by robust macro outlook of core Islamic...show more content...
In this system, conventional banks make profit through the different rates of interest by borrowing and lending of money. However, one of the
drawbacks of conventional banking is that it is prohibited from trading in the shareholding of the borrowing concern. (Shahid H. , et al., 2010). The
performance of all the banks in the country may not necessarily be on the positive side especially since the recent financial crisis of 2007. Banks have
managed to pull through but not without some being injured in terms of stock prices or profits. In 2002, the Malaysian government started the
implementation of the banking sector reformation in respond to the 1997 financial crisis. Under the reform plan, Malaysian government guided the
merger activities in the banking sector through the central bank. Prior to that date, the banking sector was made up of 54 domestic deposit taking
institutions which became ten large–capitalized banks by the end of 2002. (Ahmad, Ariff, & Skully,

Content
Introduction1
How Islamic banking system is different from conventional one?1
Maintenance of CRR/SLR:4
Project appraisal and evaluation:4
Basis for collection of deposit5
Moral Dimension5
Emphasis on Productivity as compared to credit worthiness5
Scope of the activities:6
Guarantee for deposit:6
Distributive justice and economic stability:7
Allocate Efficiency:7
Stability of banking system:8
Growth of the banking system:8

Emphasis on the character of the loan applicant:8
Conclusion10
References10
Introduction
Banking system plays a very important role in the economic life of the nation. The health of the economy is closely...show more content...
There is injustice in both situations in conventional financing system. The Islamic system of financing may not eliminate or change the level of these
uncertainties in all cases and at all times, but would definitely redistribute the consequences of these uncertainties over all the concerned parties in a
just manner. вћў Because of the Shari'ah restrictions and the prohibition of usury the detailed relationship to the Regulatory Authority is different. вћў
Target customers are partly different. вћў In a conventional interest–based banking system the revenue of a bank arises from market imperfection as
well as fees and commissions while in an Islamic–based banking system the revenue is generated by fees and commissions (administered prices). вћў
In Islam, there is a clear difference between lending and investing; lending can be done only on the basis of zero interest and capital guarantee, and
investing only on the basis of Mudaraba (profit–and–loss–sharing). Conventional banking does not, and need not, make this differentiation. But an
Islamic bank has to take this into consideration in devising a system to cater to the Muslims. Therefore such a system has to provide for two
subsystems, one to cater to those who would "lend" and another for those who wish to invest.
Maintenance of CRR/SLR:
All Islamic Banking Companies shall maintain Cash

Literature Review On Islamic Banking
Chapter Two: Literature Review
2.1: Introduction
2.2: Empirical Work
There are few studies on customer perceptions number of Islamic banking services. Study from Erol and El–Adour (1989) and Erol et al. (1990) is
regarded as the earliest investigate the factors that influence the customer to choose Islamic banking. Using both conventional and Muslim banking
customers as respondents, the study found that the provision of services quickly and efficiently, the bank's reputation and confidentiality are the most
important selection criteria for bank customers who visit the Islamic banks. In their study, found religion plays a less important role in the customer's
decision to deal with Islamic banks. Haron et. al (1994) made a study of 301 respondents...show more content...
Almost 80% of respondents were non–Muslims. Therefore these research reports are mostly non–Muslim customer's opinion on corporate banking
Muslim. This study proves that Muslim banking products are not so popular among corporate customers in Malaysia and only a few maintain banking
relationships under the Islamic banking system. In addition, nearly 65% of respondents indicated that their knowledge of Islamic banking system is
very limited. This study shows that there is a misunderstanding among respondents regarding the objectives of Islamic banking. While 38.1% of
respondents were uncertain about the nature of profit sharing system in Islamic banking, 50% believe that this principle is the only principle adopted
by Islamic banks as a replacement Riba. Respondents were not familiar with other principles such as Musharakah, Ijarah, Wakala, and Istisna'a. Overall,
the conclusions of the study are that there is a general knowledge that inadequate corporate banking products and services to Islam among

Islamic Banking: Sharia Compliant Finance
Introduction:
Islamic banking is banking action that is reliable with the ethics of sharia and its applied presentation over the change of Islamic economics. As such, a
more right word for 'Islamic banking' is 'Sharia compliant finance'.
Sharia forbids getting of exact interest or fees for loans of money, whether the expense is stable or moving. Deal in businesses that provide goods or
services considered contrary to Islamic principles (for example pork or alcohol) is also forbidden "bad and forbidden".
Although these preventions have been functional historically in varying degrees in Muslim countries and societies to avoid unIslamic practices, only
in the late 20th century were a amount of Islamic banks formed to relate these ethics to private or semi–private commercial organizations contained by
the Muslim community.
The first recent testing with Islamic banking can be traced to the organization of the Mit Ghamr funds Bank in Egypt in 1963. Throughout the past four
decades Islamic banking has full–grown quickly in terms of size and number of players. Islamic banking is currently practiced in more than 50
countries like In Iran, Pakistan, and Sudan, only Islamic banking is allowed.
1.Need for professional bankers:
They require for expert bankers as well as managers cannot be more than emphasize. a few number of bankers at this time running by the direct
participation by himself or by the boss how don't cover much experience of Islamic bank activities and

Islamic Law And Islamic Banking
Forty years ago, the Islamic banking industry was created, on a modest scale, to fill a gap in a banking system that was not listening to the fervent
Muslim believers. Morocco has been following the same development in offering Islamic finance services to its citizens through Islamic windows in
conventional banks. In parallel to this development of the Islamic financial industry in Morocco, it seems very crucial to evaluate critically based on
Maliki law school the previous experience of Islamic windows in conventional banks. Taking into considerations, the differences between schools in
the interpretation and implementation of Islamic law in economy life, the objective of this paper was to critically analysis the practice of Islamic
banks in Morocco. This paper aimed at analyzing the characteristics of different schools of Islamic law and how this would affect Islamic banking. The
final aim of this paper was to highlight the importance of jurisprudence/ new interpretations in developing Islamic banking. Qualitative methodology
based on semi directive interviewees was the main approach for this paper. Three levels of gaps have been found out. These gaps are related
respectively to Murabaha, Musharaka and Ijara. Three recommendations have been advised to fill the gaps: Absolute isolation of Fund, Sharia auditing
committee And Compliance with AAOIFI Standards
Introduction
1. Background of research
1.1 Islamic finance industry
Forty years ago, the Islamic banking industry

Product Differentiation between Islamic Banking and Conventional Banking
Submitted to:
Quazi Sagota Samina
Senior Lecturer,
Department of Business Administration.
East West University, Dhaka.
Submitted by:
NameID
Arafat Rauf2009–2–10–345
FIN 380
Section: 2
Group: 10
Fall: 2011
Date of Submission: 23rd October 2011
Table of Content
Executive Summary3
Objective of the Study3
Limitation of the Study3
Analysis4
Bibliography12
Executive Summary

Islamic banking refers to a system of banking or banking activity that is consistent with Islamic law (Sharia'h) principles and guided by Islamic
economics. In particular, Islamic law prohibits usury, the collection and payment of interest, also commonly called riba. Generally,...show more
content...
When a client gets into difficulty, conventional banks get worried about their money, and make all efforts to recover the money, including taking over
the collateral. In conventional banks charging interest does not stop unless specific exception is made to a particular defaulted loan. Interest charged
on a loan can be multiple of the principal, depending on the length of the loan period.
(Website of scribd.com) Uttara bank (UBL)
UBL is one of the largest private banks in Bangladesh. It operates through 211 fully computerized branches ensuring best possible and fastest
services to its valued clients. The bank has more than 600 foreign correspondents worldwide. Total numbers of employees are nearly 3,562. The
Board of Directors consists of 13 members. The bank is headed by the Managing Director who is the Chief Executive Officer. The Head Office is
located at Bank's own 18–storied building at Motijheel, the commercial center of the capital, Dhaka.
Special loan scheme
Consumer credit
Uttaran Consumer–Credit Scheme :
________________________________________
UBL started Uttaran Consumers Credit Scheme from 1996.UBL offers opportunity of Financial assistance for –
Motor cycle/car– New or re–conditioned.
Refrigerator/ Deep Freeze.
Television/ VCR /VCP/VCD
Radio/ Two–in–one/ Three – in – one
Air–Conditioner/ Water Cooler/ Water Pump
Washing Machine.
Personal Computer/ UPS/ Printer/ Type writer
Sewing Machine.
House hold furniture–

The Modern Islamic Financial Institutions Essay
Introduction:
Conventional finance is Based on the neoclassical economic assumption which assumes that every individual that are involve in the economy have a
profit maximization goal. In order to achieve that, the neoclassical economy also assumes that this profit maximization is being done by every rational
individual which will weigh risk and return in every opportunity.
Although there is no issue with profit maximization in Islam as long as it does not lead to harm or exploitation to society (Al–aali 2012), the means of
maximizing profit is more than just weighing the risk and return. Profit maximization in Islam should abide to Shariah.
Abiding to Shariah in an overview is Prohibitions of riba, gharar and maysir, this is what distinguish Islamic finance from its conventional counterpart
(Ayub, 2007). As an alternative, Islamic financial system have interest free loans, Islamic joint–ventures (musharakah/mudarabah) and trade or
lease–based (murabaha/ijarah/salam) financing structures (Azmat et al. 2015). Contemporary Islamic financial institutions have developed, and
continue developing, products that mirror the classical Islamic products, and evade from the association with riba, gharar and maysir (Kamla & Alsoufi
2015).
With increasing demand for Shariah compliant stocks, countries like Malaysia have moved to introduce an Islamic stock market as an alternative to
conventional stock market. This stock market consists of stock that is compliance to the Shariah. To

Advantage And Disadvantage Of Islamic Banking
ABSTRACT
Missionary effort or approach is applicable to invite the public either Muslims or non–Muslims are implemented through various methods. Nowadays,
it can be seen that the Islamic banking industry can be used as a medium to communicate and spread propaganda. Through this medium, it will
demonstrate the power and advantages of Islamic banking system compared to conventional systems. This can also be seen in the Islamic banking
system is not only widely accepted by the Muslim community even non–Muslim communities are also using this system. INTRODUCTION
Islamic banking is a controlled institution based on the principles of sharia Islamic rules on transactions made. This means that the Islamic banking
system does not accept or allow payment of benefits based...show more content...
The first Islamic banking that established was Bank Islam Malaysia Berhad (BIMB) in July 1983 and was listed on the Main Board of the Kuala
Lumpur Stock Exchange (now Bursa Malaysia Bhd) on 17 January 1992. Products that offered by BIMB includes deposit–taking instruments such as
current and savings deposit, which fall under the contract of Al–Wadiah Yad Dhamanah (guaranteed custody) and investment deposits under the
contract of Al–Mudharabah (profit sharing). Other than that, the bank also grants financing facilities such as working capital financing under
Al–Murabahah (cost–plus), house financing under Bai' Bithaman Ajil (deferred payment sale), leasing under Al–Ijarah and also project financing
under Al–Musyarakah (profit and loss

The Selection Of Islamic Banking Sector Essay
Customer's Patronage in selection criteria of Islamic banks in Pakistan
Scholar one: Aziza Naz* (aziza_ch@yahoo.com), *Correspondence author.
Scholar two:Awais Farooq (aawaisfarooq@gmail.com)
Abstract:
The purpose of this study is to examine those factors which help the consumers in the selection of Islamic banking sector. It is observed that Islamic
banking sector is the most growing industry in Pakistan so, according to the customer's preferences the selection criteria for Islamic banks is proposed
as Shariah compliance, Quality and Attractiveness of Offerings, Friendliness of bank personnel, Cost and benefit analysis and Awareness. It is also
observed that there are many factors but these are the most important factors which patronage the customer toward Islamic banks.
Key Words: Islamic banking sector, Shariah compliance, Criteria for banking sector
Research Aim: The aim of this paper is to identify those factors which customers preferred in the selection of Islamic bank in Pakistan. These factors
or preferences are such as Shariah compliance, Quality and Attractiveness of Offerings, Friendliness of bank personnel, Cost and benefit analysis and
Awareness. These factors are in the customer's mind in the selection of Islamic bank.
Research finding: Shariah compliance, Quality and Attractiveness of Offerings, Friendliness of bank personnel, Cost and benefit analysis and
Awareness about Islamic banking.
Methodology: This paper is qualitative nature in which we used

Concepts of Islamic Finance Essay
Islamic finance is the system that practicing financial services according to the principles and rules of the Islamic commercial jurisprudence. It is a
system that operates the services based on Islamic law which is called shari'ah which is based on Al–Quran and Sunnah. The objective of the Islamic
finance is maximizing profit by minimizing loss but at the same time taking consideration on the welfare (maslahah). In Islamic finance, it is
prohibited from any payment which is over and above the principle which is called interest. Interest is known as riba or usury which is refer as excess
of money imposed from the principal amount.
The sources of the shari'ah is come from primary and secondary sources. The primary sources is based on...show more content...
Their thoughts become the impetus for Muslims to apply Islamic teachings in all aspects of life. They are discuss the fact of legality of interest
imposed in the transaction which is prohibited by Islamic law (Shariah). Although fatwas or opinions by Muslim jurists clearly stated the unlawfulness
of interest dealing by conventional banks, there no effort and action was taken until the early of 20th century. The first experimental local Islamic bank
was established in rural area of Pakistan in the late of 1950s which is charged no interest on lending transaction. Next in 1963, the revolution of the
modern Islamic banking system has marked a milestone by the establishment of Mit Ghamr Local Saving Bank which is located in the Nile Delta,
Egypt. It's provided banking services such as deposits account, loan account, equity participation, direct investment and social services. In 1971, under
the regime of Mr. Sadat, the interest–free concept was revived and new Islamic bank was established known as Naseer Social Bank which is carry out
financial activities based on Shariah concept. It provided a many financial products and services include practicing interest–free concept by giving loans
to poor people, for student scholarships on credit and loan credit to a small business and entrepreneurs based on the profit and loss sharing concept.
In 1975, private Islamic bank was be set up by the Muslim businessman in Dubai which is known as Dubai

Islamic Banking vs. Conventional Banking
Islamic Banking vs. Conventional Banking
In most Islamic countries, they tend to practice two types of financing in banking industry which are conventional and Islamic banking. The country
like in Malaysia has successfully developed an Islamic banking system that operates in parallel with the conventional banking system. There is
similarity between conventional banking and Islamic banking which helps to promote economic growth provided financing services such as credit
facilities for business activity, mortgage, securities, etc. in order to achieve their same ultimate profit objectives. However, there are also having
differences in practicing financial services due to most investors having their own preferences on their investments and...show more content...
The objective of conventional bank is to maximize profit without any restriction. However, Islamic bank also aims at maximizing profit but subject to
Shariah restrictions. Both Islamic bank and conventional bank are supervised by central bank (Bank Negara Malaysia, 2013). In general, conventional
banking principles are fully manmade whereas in Islamic banks principles and rules are based on Islamic Shariah. The main principle practicing by
Islamic banks in their transactional activities is mainly based on profit and loss sharing. According to Shahzad (2012), interest rate is main source of
earnings for conventional banks. Besides, riba (interest), gharar (uncertainty) and masyir (gambling) are prohibited in Islamic banking whereas
conventional banking is involved in interest and speculation activities (Hut, 2010). Mean that, conventional banks can involve in any transactions as
they like. However, Islamic Shariah law only allows Islamic banking activities that are lie in the framework of protecting public interest and
safeguarding it. For instance, transaction activities that deal with alcohol, tobacco and pig made products are prohibited in Islamic banking based on
Islamic Shariah principles.
Concept of money lending gives another way of comparison between conventional bank and Islamic bank.

Introduction
The co–existence of conventional banking along with Islamic banking gives an exceptional platform to compare Islamic banking practices with those
of conventional banking practices. It is clearly known that Islamic banks are different from those of conventional banks since they do not deal with
interest (Riba), i.e. usury, which is totally banned in Islam. In other words, banks are not allowed to take an interest rate on the loans given to customers.
The concept considered in Islamic banking is the profit–and–loss sharing (PLS) which is based on profit–sharing and joint–venture that goes with
Islamic Sharia. In fact, PLS adapts the system of integration in which borrowers share profits and losses with banks with their...show more content...
Importance of the Study
The privilege of Islamic banking is that it provides the same services the conventional banks provide but with the Islamic Sharia. What is more
important of this study is to find out more about the profit–and–loss sharing PLS paradigm.
Objectives of the Study
The main objective of this study is: (a) to find out the extent of using profit–and–sharing paradigm in Islamic banks in Jordan; (b) to search about the
main principles of Islamic interest – free banking and operations compared to interest – based banking system in Jordan; and (c) to compare between
conventional deposit rates and Islamic investment rates.
This study examines the principles and criteria Islamic banking operates in providing their financial services which make different from those of
conventional banks.
The Methodology
To find out more about the usage of profit–loss sharing paradigm in Islamic banking system, the researcher will consider the long–run relation and the
short–run dynamics between conventional deposit rates and Islamic investment rates. To investigate about the profit–and–loss sharing paradigm, we
follow (Chong & Ming–Hua, 2009) long–run and short–run principles and efficiencies tests to compare the conventional deposit rates with those of
Islamic banking rates. The Bivariate Granger Causality Test will be first used to determine the dependent and independent variables of this feature.
Two hypotheses will be tested: (a) changes in the

Executive summary
With the development of modern banking, the competition is significantly increasing in banking industry. Different and new competitors have arrived
into the market and made the industry even more competitive. Islamic banking is relatively a new concept in the banking industry, but this concept
gets enormous popularity in recent times because of its lower default rate and customer oriented principles. The banking principles of Islamic bank can
be clearly differentiated from the principles of conventional banking. Islamic banking operation is conducted under the "Shariah Rules" and directly
supervised by "Shariah Committee". Unlike conventional banks Islamic banks do not deal in riba or interest, which make products and services of
Islamic bank dissimilar to conventional banks'. Most of the modes of investment in Islamic banks are different than that of conventional banks. The
most important function of a conventional bank, lending/providing credit is different in Islamic banking and known as investment. Because of its
customer oriented and Shariah based features, many conventional banks are establishing separate Islamic banking branch in Bangladesh to perform
Islamic banking functions.
As there are differences in operation between conventional and Islamic banks, they used to follow different financing and investment techniques to
earn profit and maximize shareholders value. In Bangladesh, private Islamic banks are not as greater in number as private

The Pros And Cons Of Islamic Finance
These theoretical models perceived two tired mudarabah finance structure, in which the Islamic bank on one hand would receive deposits as agent
(mudarib) of its customers; and on the other hand provide finance to enterprise as principal [sleeping partner] (rabb al–mal). In this early period (1930s
to 1960s), developments in Islamic finance took place on the intellectual side only. The first practical realization of a bank–like Islamic financial
institution, on a small scale, was that of Mit Ghimar in Egypt which started in 1963 and closed down in 1967. Another independent experiment of
Islamic finance started in Malaysia in the form of Shari[ah (Ahmad, 2004) Islamic banks differs many sites from conventional banks Soon as Islamic
banks rose after colony liberated around the second...show more content...
Profits made will be shared by the partners based on an agreed ratio which may not be in the same proportion as the amount of investment made by
the partners. However, losses incurred will be shared based on the ratio of funds invested by each partner. Ijarah Thumma Bai' (Hire purchase)
Ijarah Thumma Bai' is normally used in financing consumer goods especially motor vehicles. There are two separate contracts involved: Ijarah
contract (leasing/renting) and Bai' contract (purchase). The contracts are made one after the other as shown in the diagram on page 7. Wakalah
(Agency) This is a contract whereby a person (principal) asks another party to act on his behalf (as his agent) for a specific task. The person who
takes on the task is an agent who will be paid a fee for his services. A customer asks a bank to pay someone under certain terms. The bank is therefore
the agent for carrying out the financial transaction and the bank will be paid a fee for its services. Qard (Interest–free loan) Under this arrangement, a
loan is given for a fixed period on a goodwill basis and

Principles of Islamic Banking Essay
INTRODUCTION
The basic concept of Islamic banking which is also known as 'interest–free banking' is based on basic ethical standards with just one main difference–
Muslims are not allowed to pay or receive interest. This does not mean that business activities or making a profit are not encouraged, they are but as
long as they don't involve interest in any form. To fulfil this purpose, financial instruments have been introduced by the Islamic financial institutions to
satisfy these requirements. An example that can be seen is that equity financing is used instead of debt financing. Furthermore, instead of giving a fixed
interest rate on the savings account, Islamic banks offer a share of the bank's profit, as a return on deposits and...show more content...
The early seventies saw the institutional involvement. The Islamic Development Bank, an inter–governmental bank was established in 1975. The first
private interest–free bank, the Dubai Islamic Bank was also setup in 1975 by a group of businessmen from several countries. Two more private banks
were founded in 1977 under the name of Faisal Islamic Bank in Egypt and Sudan. Twenty–five years since the establishment of the first Islamic bank,
more than 150 Islamic institutions have come into existence. Though most of these are in Muslim countries, there are some in Western Europe as well
as in North America and Asia. PRINCIPLES OF ISLAMIC BANKING
The Islamic banking system follows certain, yet simple, rules set by the Qur'an and the Shari'ah (Islamic law), which if deviated from the system
becomes un–Islamic. These are summarized as follows:
1. Any predetermined payment or benefit over and above the actual amount of principal is prohibited:
Islam allows only the type of loan in which interest of any form is not charged. Interest in this case is in either monetary form or other beneficiary
forms such as using the borrower's property, etc. in return for the lent money. In other words, any type of benefit received by the lender from the
borrower in return for lending the money is prohibited. This is different however from the concept of 'profit–sharing' which will be explained next. This
is different from the typical loan types of commercial

Islamic Banking Advantages And Disadvantages
According to Mansoor Khan, Islamic banking and finance (IBF) is an economic ideology that depends on Shariah rules which are extracted from the
Islamic holy book – Quran– and Al Sunnah – what the prophet Mohammed stated or did.This ideology is mainly about expunging interest and other
exploitive elements from the financial sphere. Islamic finance is an equity–based system depends mainly on Profit and Loss Sharing (PLS) modes. the
instruments for doing so are Mudarabah (Joint venture) and Musharakah (Equity participation) to perform the normal banking activities like
investment, lending and borrowing. these banks replace the interst–based banking system to other interest–free instruments. for example, Murabaha
(deferred
According to the Islamic...show more content...
He also stated that Islamic banks in Egypt have a low market share of only 2–5%.
The causes of this low demand are still unclear, and probably the problem lies in the fact
that it is still unpopular enough. We suggest that a level of awareness should be provided
about the advantages of investment in Islamic banks in Egypt.
The report resulting from the survey gave many information about the condition
of Islamic banks in Egypt. The survey was conducted on a sample of one thousand adults
above 15 years old in the year 2012 in Egypt, Algeria, Morocco, Tunisia and Yemen. The
percentage of Muslim respondents –as they identified themselves– were 95% in Egypt
compared to 100% in other countries. While 48% of the survey respondents have known
of the Islamic banks in their countries, just 8% of the ones who took loans or have an

account in a financial institution have referred to themselves as current users of Islamic
banks. Islamic banking is also growing a lot in the Arab world, according to the survey, it
is considered one of the most growing financial sectors and accounts for 1% of global
financial assets. The leading countries of this banking system is GCC (Gulf

Islamic Banking And Conventional Banking

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