Islamic Banking – An Alternative System

Islamic banking is an investment and financing system which expands globally. The Islamic banks have only been established for some 30 years but the banking system is based on long-going traditions within Islamic finance. The system is founded on ethical values and emphasises the well-being of society as a whole.Islamic banking is different from conventional banking in most aspects, since its close tie to religion is very important. The system is not based on interest, as it is prohibited in Islam. Instead Islamic banks offer various kinds of accounts and a range of financing alternatives all complying with the Islamic Law – Shari’a…

Contents

1. INTRODUCTION
1.1. PURPOSE
1.2. RESEARCH QUESTIONS
1.3. LIMITATIONS
1.4. DEFINITIONS
1.5. METHOD
1.6. PRESENTATION OF AUTHORS
1.7. OUTLINE
2. BACKGROUND
2.1. ENVIRONMENTAL BACKGROUND OF ISLAM
2.1.1.Ownership and wealth
2.1.2. Almsgiving – Zakat
2.2. ISLAMIC LAW – SHARI’A
3. ISLAMIC FINANCE
3.1. ENVIRONMENTAL BACKGROUND
3.2. THE EMERGENCE AND SPREAD OF ISLAMIC FINANCE
3.3. CONTRACTS AND BUSINESS RELATIONS
4. ISLAMIC FINANCIAL INSTITUTIONS
5. THE ISLAMIC BANKING SYSTEM
5.1. INTRODUCTION
5.1.1. Environmental background
5.1.2. Different categories of Islamic Banks
5.2. THE CONCEPT OF ISLAMIC BANKING
5.2.1. Aims of Islamic Banks in general
5.2.2. Activities of Islamic Banks
5.3. INTEREST/USURY – RIBA
5.3.1. Introduction
5.3.2. Reasons for prohibition of interest – Riba
5.3.3. Different interpretations of the meaning of Riba
5.3.4. Summary
5.4. DEPOSIT ACCOUNTS
5.4.1. Introduction
5.4.2. Current, Checking or Demand Deposit accounts
5.4.3. Savings accounts
5.4.4. General investment accounts – Mudaraba accounts
5.4.5. Special investment accounts
5.4.6. Summary
5.5. FINANCING ALTERNATIVES
5.5.1. Introduction
5.5.2. Capital Trust Financing – Mudaraba
5.5.3. Equity Financing – Musharaka
5.5.4. Comparison between Mudaraba and Musharaka
5.5.5. Cost-Plus Profit/Mark up – Murabaha
5.5.6. Other Mark-up schemes
5.5.6.1. Credit Sale/Sale on deferred payment basis –Bai Muajjal
5.5.6.2. Advance Payment/Forward Buying –Bai Al-Salam
5.5.6.3. Commissioned Manufacture – Bai Istisna
5.5.7. Leasing – Ijara
5.5.8. Leasing and Purchase – Ijara-Wa-Iqtin’a
5.5.9. Summary
6. IMPLEMENTATION OF ISLAMIC BANKING
6.1. RELIGIOUS BACKGROUND
6.2. PRESENT SITUATION – AN OVERVIEW
6.3. EGYPT
6.4. INDONESIA
6.5. IRAN
6.6. JORDAN
6.7. KUWAIT
6.8. LEBANON
6.9. MALAYSIA
6.10. PAKISTAN
6.11. SAUDI ARABIA
6.12. SUDAN
6.13. TURKEY
6.14. SUMMARY
7. ADVISORY AND REGULATORY ORGANS
7.1. INTRODUCTION
7.2. SHARI’A SUPERVISORY BOARD
7.3. THE ISLAMIC FINANCIAL SERVICES BOARD (IFSB)
7.4. THE ACCOUNTING AND AUDITING ORGANIZATION FOR ISLAMIC INSTITUTIONS (AAOIFI)
8. ISLAMIC DEVELOPMENT BANK (IDB)
9. ISLAMIC BANKING IN NON-MUSLIM COUNTRIES
10. FUTURE OF ISLAMIC BANKING
11. REFLECTIONS
LIST OF REFERENCES

Author: Björklund, Iréne,Lundström, Lisbeth

Source: Kristianstad University

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Islamic Banking – An Alternative System