Islamic banking

Around 100 Islamic financial institutions now exist worldwide. To understand the need for an Islamic banking system, it is necessary to look at Islam's overall economic approach. Islam is a total way of life with the Qur'an and the sunna as primary sources. Recently, an Islamic revival has been occurring. One impetus for this movement is the inadequacy of both capitalism and communism in serving Muslim societies. Shari`a regulates the allotment of wealth, management, production, and other economic activities. It approves of private ventures and forbids interest. Conventional finance houses today carry liabilities between 12 and 30 times as large as their capital -- a highly undesirable situation. Islamic banks carry current, investment, reserve, and Mudarabah accounts. Financing may occur by various methods such as mudaraba (capital and skill partnership), musharaka (partnership), qard hasan (interest-free loans), and ijara (leasing). Among the difficulties Islamic banks fac