Islamic Finance

To better understand students’ selection criteria when choosing an Islamic bank, questionnaires were given to 154 undergraduate students in Labuan, Malaysia. Findings of the study are classified into six clusters based on factors such as friendliness of bank staff and availability of ATMs. The results are primarily of potential use to bank managers who might want to bring forward specific Islamic deposit product policies for different target groups. The managers could use the outcomes of the current study for better planning of Islamic deposit products.

An Islamic Renaissance has occurred over the last 30 years as Muslim countries have increased in size and clout. Pakistan was formed to let people live an Islamic way of life.

Although some say that interest protects people from inflation, actual statistics refute this argument. Inflation has numerous causes and effects. Islamic banks have a more direct stake in the performance of firms they finance, and this greater stake helps the society at large. Low-income people and middle-class savers fare better in an interest-free system, particularly when prices are climbing. Interest has kept countries from protecting their savings from inflation. Interest does not galvanize an economy's savings in a superior way.

Pakistan and Iran have switched to completely interest-free banking systems, and over three dozen distinct Islamic banks are conducting business in the world today. Still, many people are unaware of the role or mission of Islamic banks because the place of banking in Islamic economics is not well-understood. According to some Islamic legal scholars, an Islamic economy has three sectors: siasi (public and governmental); ijtimai (oriented toward or affiliated with social welfare, charity, and alms); and tijari (private and commercial). Banking falls into the third sector.

During his six-day tour of West Africa, Prince Mohammad al-Faisal al-Saud instituted the biggest expansion of DMI (Dar Al-Maal Al-Islami) to date. Three branches opened in Guinea, and two others in Niger and Senegal. Each has a subsidiary bank and investment company. In its first year of operation, DMI made $7.9 million in profit, all from halal investments. Each subscriber received a return of 11.9%.

Islamic law is open to change, as it is a union of shari`a (law of the

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The short history of and future possibilities for Islamic banks are of note. Strong Islamic banks emerged in the 1970s and 1980s as Muslims established institutions that shun interest. Most governments in the Islamic world did not strongly support the Islamic banking movement; in fact, they were pretty indifferent. Most support for Islamic banks came from private sources, though both Pakistan and Iran resolved to establish Islamic economies.

The history of Islamic banking can be covered by looking at developments around the Muslim world through a country-by-country description.