Use this URL to cite or link to this record in EThOS: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.329773
Title: Islamic banking
Author: Chachi, Abdelkader
Awarding Body: University of Wales, Bangor
Current Institution: Bangor University
Date of Award: 1989
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Abstract:
ement among economists as to why interest should be paid, it was almost unanimously held by most if not all economists that interest is necessary for banking and consequently necessary for financial and economic development and that any religion, like Islam, that prohibits interest, is an obstacle to economic growth and development. This view was not exclusively held by Western economists who may not know much about Islam, but even by some Muslim thinkers who, repeating the controversial arguments justifying interest, claimed that there is no other way to develop except to leave the religion of Islam aside or at least its economic and political aspects because it stands in the way of progress and development. However, there were some other Muslim scholars who were not so convinced of the Western and pro-Western idea that interest is a necessary component of any financial and economic development and were convinced that if Allah has forbidden interest then there must be something wrong with it and when He allowed trade and PLS (Profit and Loss Sharing) system of finance as alternatives, then these must, perhaps, lead to the achievement of greater financial and economic development 'without tears' (Kahf 1978). They sought in the Koran and Sunnah a way of doing banking and encouraging development that is not only complying with Shariah but that may lead to a more just and more beneficial way of development. They dug into the historical practices of the Prophet Mohammed (PBUH), his companions and the early followers and found that the alternatives, to interest, that were acceptable to, maintained and encouraged by, Islam, are trade (profit) and the PLS system which were practiced long before the rise of Islam, so they just applied the principles to today's banking practices and called it 'Islamic Banking'. This study aims to show that interest is not a necessary component of banking, as was widely held before, and that Islam, by prohibiting interest and permitting profit and Profit sharing as alternatives, is not an obstacle to, but a promoter of, economic growth and development with social justice. This study also attempts to distill and refine the theoretical bases of Islamic Banking. It critically surveys and discusses the different theories that have been advanced to justify interest and profits and compares the functions and institutions of the Islamic Financial and Banking Systems with their Interest-Based counterparts. It also discusses the likely impact of the Profit and Loss Sharing (PLS) system, and empirically analyses the performance of some of the oldest Islamic Banks vis-a-vis the performance of the Interest-Based Banks of the same countries. The empirical analyses undertaken showed that Islamic banking is more appropriate and more relevant to the economic growth and development of the Muslim World. Despite the fact that they are operating in hostile and non Islamic environments, the existing Islamic Banks have managed to mobilise substantial amounts of deposits and contributed greatly to the finance of many economic sectors and projects of the countries they are working in.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID: uk.bl.ethos.329773  DOI: Not available
Keywords: Banking in Muslim counties Finance Taxation International trade Philosophy Religion
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