Islamic banking : from ethical premises to secular achievements !

Abstract EN

Due to the reason of interest charging, conventional banks and financial institutions were no go places for Muslims.

Started in the second half of 1970s Islamic banks and financial institutions are institutional outcomes of the Islamic economics movement started in the mid-twentieth century.

Muslims expressed unprecedented interest in this banking and financial system since the day they were established because the basis for establishment of Islamic banking system is Islamic socio-ethical framework.

Islamic banking has performed phenomenally both in the development and growth.

The cumulative aggregate growth rate (CAGR) of Islamic finance is near to 20% much higher than the CAGR 3% of conventional counterpart.

To a great extent, this progress, however, disappointed majority of Muslims as the fruit of this impressive growth and development of Islamic banking did not reached to the majority of Muslims both in developing and developed countries.

Majority of the population in Islamic world is still unbanked and living in vicious economic and social conditions.

After making an historical overview and the objectives of establishing Islamic banks and financial institutions, this paper highlights the socio-economic issues of the Muslim countries and demand to the Islamic bankers and the authorities for making a reconciliation on the banking policies and practices in the consideration of the objectives of Islamic economics.