The recent popularity of Islamic banking has prompted many to wonder how Islamic banks relate to other banks, how they could cooperate with Western banks, and how they should be regulated. Some believe that Islamic finance is incompatible with banking elsewhere due to the inordinate amount of risk depositors bear in an Islamic bank and other differences that would hamper the regulation of such banks.
Islamic revivalism has spurred the creation of Islamic banking and finance. Islamic banks utilize equitable risk sharing instead of riba, which shari`a prohibits.
Islamic economics is more a normative science than a positive one. The social sciences in
Interest is at the core of today's banking system. It is well understood that interest impedes projects with low profit margins. This impediment can be particularly problematic in the less-developed world.
Capital should flow in an Islamic economy as blood flows in the human body. Funds should go where they are needed. With the domination of
The first Islamic bank opened in 1975 to mixed reactions; today, an Islamic instutution, the Dubai Islamic Bank, is considered a reputable bank in its region. Islamic banks avoid riba (interest) in following the guidelines set forth in
Muslim countries are becoming more and more conscious of the need to comply with Islamic law by eliminating interest from their economies. Both jurists and economists are thinking about Islamization.
Entrepreneurs wishing to procure funds from an Islamic bank should remember three tips: knowledge of oneself, knowledge of the proposed venture and its goals, and knowledge of the means desired for achieving said goals. It should not be assumed that Islamic banks are charity groups -- they are businesses and they should be approached as such. Since an Islamic bank faces more risk in financing a project than a conventional bank does, audited financial statements from the applicant's firm are a must. Feasibility studies have a role in the application process.