Ethical Banking and Islamic Banking : a comparison of Triodos Bank and Islami Bank Bangladesh Limited

Joint Authors

Khan, Tariq Allah
Muhammad, Amirah Bint Rafiq Nabi

Source

Islamic Economic Studies

Publisher

Islamic Development Bank (IDB) Islamic Research and Training Institute (IRTI)

Publication Date

2017-04-30

Country of Publication

Saudi Arabia

No. of Pages

44

Main Subjects

Economics & Business Administration

English Abstract

Ethical finance and Islamic finance are the two important topics in the post global financial crisis market environment and in the context of sustainable development goals and circular economy.

If Islamic finance is inherently ethical finance, then what remains the difference between the two is an interesting theme for investigation.

Islamic finance is governed by universal and divine legal and moral principles and standards related to economic transactions.

Contemporary Islamic financial practices are however, strongly criticized for giving precedence to legal forms over ethical substance and for the rising gap between moral ideals and practical realities.

Ethical finance is a conscious human effort to reform finance and it embraces environmentally, socially and morally conscious practices.

In this paper we select two banks, namely Islami Bank Bangladesh Limited (IBBL) and Triodos Bank.

We perceive that the first is an ideal Islamic Bank and the second is an ideal Ethical Bank.

We undertake an analysis of the content of balance sheet disclosures of the two banks and try to gauge the similarities and divergences in their business principles and practices.

The analysis uncovers that the current practices of IBBL may far exceed other Islamic banks in terms of financial inclusion, microfinance, gender balance, SME financing and green banking while still being financially stable and profitable.

However, Triodos Bank has some significant lead over IBBL regarding ethical practices since it only promotes sustainable businesses.

If Triodos Bank exceeds IBBL in ethical expectations as we conclude, then it is far ahead of other Islamic banks in such comparison.

The implication of our conclusion is that Islamic banking

Data Type

Conference Papers

Record ID

BIM-776573

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