Islamic banking refers to a system of banking or banking activity that is consistent with the principles of the Shari'ah (Islamic rulings) and its practical application through the development of Islamic economics[i]
The Islamic banking system compared to the one implemented in the western side varies a lot since the banking system regarding to middle east is rule by the principle of Islamism which prohibits usury, the collection and payment of interests, trading in financial risk (gambling) and investment in business that are against ethic principles. This system has wide universal appeal what made the Islamic system to innovate in order to replace such important things for other ones such as their managerial capabilities. However the future of Islamic banks will depend heavily in the development of accounting standards due to the fact that it will provide reliable information of the type that the Islamic banks would require for profit-sharing, rent-sharing or for cost-plus financing.
[i] http://www.islamic-banking.com/what_is_ibanking.aspx
The Islamic banking system compared to the one implemented in the western side varies a lot since the banking system regarding to middle east is rule by the principle of Islamism which prohibits usury, the collection and payment of interests, trading in financial risk (gambling) and investment in business that are against ethic principles. This system has wide universal appeal what made the Islamic system to innovate in order to replace such important things for other ones such as their managerial capabilities. However the future of Islamic banks will depend heavily in the development of accounting standards due to the fact that it will provide reliable information of the type that the Islamic banks would require for profit-sharing, rent-sharing or for cost-plus financing.
[i] http://www.islamic-banking.com/what_is_ibanking.aspx
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