Islamic Banking: A study concerning the viability of Islamic financing for agriculture and manufacturing sectors

I.

Introduction

In the last decade, at the dawn of the information age, an extraordinary development has occurred in the financial sectors around the globe. Islamic banking or Shari’ah compliant banking system which was relatively unheard of in the western world is booming. Being a banking system that is Shari’ah compliant, Islamic banks differs from conventional banks because Islamic law prohibits usury, and also the payment of interest or riba in the Islamic context. Besides that, Islamic banks are also prohibited from investing in businesses that are considered haram such as businesses involved in gambling and alcohol.

Modern Islamic banking was not popularized until the establishment of Mit Ghamr in Egypt, 1963. Initially formed for an experiment on Islamic financing, the whole endeavor lasted only till 1967. [1] The establishment of Bank Islam Malaysia Berhad (BIMB) on March 1, 1983 marked the formal setting up of the Islamic banking system in Malaysia. Islamic banking in Malaysia is regulated by the Islamic Banking Act 1983.[2] This research paper is focused only on the challenges, benefits, and responses posed by Islamic financing of the agriculture (bay salam) and manufacturing (istisna) sectors.

Please click on the link below to view working paper:

Islamic Financing


[1] http://www.usc.edu/dept/MSA/economics/islamic_banking.html#evol 15/11/2007 8:10PM

[2] Jee Tzin Kit, K.Loghandran, 2003. Study Manual Operations of Financial Institution, Malaysia:IBBM

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: