Islamic banking : state of the art

Abstract EN

This paper reviews the progress of Islamic banking from both theoretical and practical aspects.

It highlights the basic principles on which Islamic banking is based and describes the operational details of Islamic banks.

It mentions some of the misgivings with respect to the viability of Islamic banking and evaluates them objectively.

It highlights the effects of Islamic banking on savings, investment, growth, allocative efficiency and stability.

The paper also reviews and evaluates the practice of Islamic banking both at the level of individual banks as well as country level experiences in Pakistan, Iran and Sudan.

At the end, the paper identifies areas where further research is needed.