The role of Islamic banks in economic development: concepts, achievements and perspectives for the 1980s

Growing interest in Islamic banking is part of a broader Islamic Renaissance. Islamic banking approaches finance as an equitable risk-sharing agreement between the provider of capital and an entrepreneur. The elimination of riba is based on the economic values of justice, stability, and growth. Shari`a forbids economic gain without the assumption of risk, money given above the principal, and speculation on the outcome of future events. Islamic financial instruments include musharaka (participation financing), mudaraba (trust financing), and zaka (obligatory alms). Financial institutions can engage in various equitable and interest-free risk-sharing activities such as musharaka, mudaraba, murabaha (cost-plus trade financing), ijara (rental financing), ijara wa-iqtina' (lease-purchase financing), and interest-free loans for projects. Islamic financial institutions exist in many places, and Egypt and Pakistan have taken important institutional steps. The implications of cooperation