Sample Essay
Islamic Banking is akin to the normal commercial banking; however it is difference in few aspects according to the Shariah Law. In Islamic Banking there is no concept of interests the law prohibits the investors and lenders to earn guaranteed fixed profits on their investments and supplied credit lines. As a result the concept of interest is abolished in Islamic banking. Aside from this it is also forbidden under the Shariah and the Islamic Commercial law to invest in businesses that deal with pork, alcohol, gambling and other questionable business. Islamic banking has been described in the teachings of the religion however the modern Islamic banking was initiated byEgyptin 1963 with the establishment of a profit sharing savings bank in a small town.
The concept of Islamic banking has rapidly become popular due to the performance and the growth potential depicted by the industry. When faced with the current financial crisis, the industry has been able to survive unscathed which is making it more attractive for businesses worldwide. “Islamic indices historically have also been outperforming the other indices with the Dow Jones Islamic Developed World Index outperforming the MSCI World Index consistently over the past few years. Growth in Islamic banking has also been stellar and it has been growing at a healthy rate of 15-20% per year according to estimates.” (Muahmmad, 2009)
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