Interest, usury and the Islamic Development Bank: alternative, non-interest financing

Islamic banking has been a modern financing method since the 1960s, though it is based on historical precedent. Growing interest in Islamic finance expanded its institutions during the 1970s. Islamic banking is based on shari`a , which prohibits riba and derives business guidelines from the sunna . Spot sales are encouraged. The bayt al-mal was the first Islamic financial institution and operated as the central bank, the Caliph's private treasury, and the public treasury. Early Muslims utilized mudaraba and various types of investment partnerships. These two general concepts have taken the modern form of profit-and-loss sharing (PLS), the basis of contemporary Islamic banking and finance. The Islamic Development Bank is an example of the Islamic financial institutions emerging in the world. Islamic finance is a good alternative financing method for developing countries.