Distinguishing characteristics of Islamic banks include their commitment to shari`a and provisions for qard hasan. The thinking and philosophical ideas behind Islamic banking, such as earning only by permissible methods, distributive justice, the honorable status of labor, and freedom and property rights, are of note.
Western ethical investing and Islamic banking, both value-oriented financial movements, gained popularity ten years ago due to disillusionment with the prevailing capitalist and communist systems. The number of ethical investment organizations has increased in the West. Simultaneously, Islamic banking has been established both in the
Islamic scholars nearly universally agree that riba encompasses bank interest and that the
Among the reasons usually cited for the recent revival of
Around 100 Islamic financial institutions now exist worldwide. To understand the need for an Islamic banking system, it is necessary to look at
Interest-free banking performance can be evaluated within two frameworks. The first one is in light of shari`a , for the only reason to develop an interest-free banking system is to act in line with
Islamic economics is presented differently from Western economics: whereas Westerners wrote books on theory, the Prophet Muhammad (SAW) and those around him lived by the Qur'an and were practical-minded.
Five measures are necessary for world peace and alleviating world poverty: a commitment to upholding the UN charter and its resolutions; ensuring the security and sovereignty of small states; the peaceful settlement of regional disputes; the upholding of human and democratic rights; and the progressive elimination of weapons of mass destruction. The economic priority of the new world order is to bridge the gap between rich and poor. Barriers to international trade, especially protectionism in developed nations, stymie the development of developing nations.
Financial sector reforms in developed and developing countries over the past two decades have been highly beneficial. Under these reforms, an economy with greater flexibility of interest rates, an enhanced role for market forces in credit allocation, increased autonomy of commercial banks, and a gradual deepening of money and securities markets is taking shape. Reduced credit rationing and greater interest rate flexibility have led to improved allocation of financial resources. An increase in competition between banks has lowered the cost of inter-mediation.
The bayt al-mal was central to the Islamic banking and financial system and is the precursor of modenr Islamic banks.