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Islamic Banking
The prohibition of interest is the feature of Islamic banking which most distinctly sets it apart from conventional banking. To Western eyes, this seems a strange restriction, but Christian countries themselves maintained such a ban for 1,400 years. Islamic Banking asks why Islam has been able to maintain its stand. The book explores the intricacies of Islamic law and the religious and ethical principles underpinning Islamic banking. It then considers the analytical basis of Islamic banking and financing in the light of modern theories of financial intermediation, and identifies the conceptual issues to be overcome.
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Critical Acclaim
Contents
More Information
The prohibition of interest is the feature of Islamic banking which most distinctly sets it apart from conventional banking. To Western eyes, this seems a strange restriction, but Christian countries themselves maintained such a ban for 1,400 years. Islamic Banking asks why Islam has been able to maintain its stand. The book explores the intricacies of Islamic law and the religious and ethical principles underpinning Islamic banking. It then considers the analytical basis of Islamic banking and financing in the light of modern theories of financial intermediation, and identifies the conceptual issues to be overcome.
Following case studies of the operations of Islamic banks in Bahrain, Bangladesh, Egypt, Jordan, Malaysia and Australia, along with Iran, Pakistan and Sudan, the volume concludes that many of the criticisms of their activities seem misplaced. It argues that the factors governing success are the distinctive system of corporate governance and continued product innovation. The book ends by considering four such innovations – Islamic investment banking and project finance, Islamic insurance, Islamic securities and the formation of a pan-Islamic international financial centre.
This pathbreaking volume – the first to consider Islamic banking and finance from a global perspective – will be of great interest to scholars of money and banking, international finance and Middle Eastern studies.
Following case studies of the operations of Islamic banks in Bahrain, Bangladesh, Egypt, Jordan, Malaysia and Australia, along with Iran, Pakistan and Sudan, the volume concludes that many of the criticisms of their activities seem misplaced. It argues that the factors governing success are the distinctive system of corporate governance and continued product innovation. The book ends by considering four such innovations – Islamic investment banking and project finance, Islamic insurance, Islamic securities and the formation of a pan-Islamic international financial centre.
This pathbreaking volume – the first to consider Islamic banking and finance from a global perspective – will be of great interest to scholars of money and banking, international finance and Middle Eastern studies.
Critical Acclaim
‘Islamic Banking is an outstanding example of collaboration among Muslim and non-Muslim scholars interested in integrating "Western-based literature with that developed in the Islamic tradition." . . . The book is a noteworthy addition to the literature on Islamic banking and finance, for its inclusion of modern intermediation and corporate governance analysis in Islamic banking sets it apart from other available books.’
– Muhammad Anwar, The American Journal of Islamic Social Studies
‘. . . the authors are outstanding in contextualizing the evolution of and demand for Islamic banking on its path through our common history. Careful explanation and detailed development help Western audiences understand the Arabic Islamic cultural perspective.’
– Wendy Carlton, Monthly Labor Review
‘Lewis and Algaoud present a comprehensive survey of Islamic banking . . . Recommended for anyone interested in the theory and practice of Islamic banking.’
– H. Zangeneh, Choice
‘This is an excellent book for any student seeking a comprehensive and well written introduction to Islamic banking. It covers both the theory and the practice of Islamic banking in just the right amount of detail to make it easy to read and interesting. Difficult concepts are clearly explained without the text being overpowered by mathematics as in so many other books these days. For anyone seeking a wide knowledge of Islamic banking, this book provides a “one-stop shop”. Every aspect of Islamic banking is explained in a straightforward and readily digestible fashion, from financial instruments, to financial systems, to the theory of financial intermediation and corporate governance. With case studies taken from fully Islamic to mixed systems the development of Islamic banking is thoroughly explored, with history and analysis complementing the more theoretical issues like the prohibition of interest. This book will certainly remain on my desk as an instant source of information on Islamic banking; I can commend it to all teachers, students and practising bankers interested in Islamic banking as indispensable.’
– John R. Presley, Loughborough University, UK
‘People are too inclined to regard their current institutions as the inevitable outcome of a natural evolutionary process. In respect of banking, it is salutary to note that Islamic banking works on a quite different, non-interest-bearing, basis from Western banking; and that several major religions, including Christianity, were in earlier times ethically opposed to interest/usury, but only Islam now keeps that faith. Professor Mervyn Lewis is a highly respected authority on (Western) banking and finance, and Latifa Algaoud is a senior official in Bahrain with a deep knowledge of Islamic banking institutions. Between them they present a highly readable assessment of Islamic banking from both (East/West) viewpoints, with a clear account of its history and principles, and its current position and state.’
– Charles Goodhart, London School of Economics, UK
‘Islamic banking has become a significant part of global banking. This is a very timely and well written book which successfully links the modern theories of conventional banking and financial intermediation and the theoretical and practical aspects of Islamic banking. By linking theory and practice, and setting Islamic banking in a wider analytical framework, the book will be invaluable to anyone with a theoretical, practical or regulatory interest in Islamic banking.’
– David T. Llewellyn, Loughborough University, UK
– Muhammad Anwar, The American Journal of Islamic Social Studies
‘. . . the authors are outstanding in contextualizing the evolution of and demand for Islamic banking on its path through our common history. Careful explanation and detailed development help Western audiences understand the Arabic Islamic cultural perspective.’
– Wendy Carlton, Monthly Labor Review
‘Lewis and Algaoud present a comprehensive survey of Islamic banking . . . Recommended for anyone interested in the theory and practice of Islamic banking.’
– H. Zangeneh, Choice
‘This is an excellent book for any student seeking a comprehensive and well written introduction to Islamic banking. It covers both the theory and the practice of Islamic banking in just the right amount of detail to make it easy to read and interesting. Difficult concepts are clearly explained without the text being overpowered by mathematics as in so many other books these days. For anyone seeking a wide knowledge of Islamic banking, this book provides a “one-stop shop”. Every aspect of Islamic banking is explained in a straightforward and readily digestible fashion, from financial instruments, to financial systems, to the theory of financial intermediation and corporate governance. With case studies taken from fully Islamic to mixed systems the development of Islamic banking is thoroughly explored, with history and analysis complementing the more theoretical issues like the prohibition of interest. This book will certainly remain on my desk as an instant source of information on Islamic banking; I can commend it to all teachers, students and practising bankers interested in Islamic banking as indispensable.’
– John R. Presley, Loughborough University, UK
‘People are too inclined to regard their current institutions as the inevitable outcome of a natural evolutionary process. In respect of banking, it is salutary to note that Islamic banking works on a quite different, non-interest-bearing, basis from Western banking; and that several major religions, including Christianity, were in earlier times ethically opposed to interest/usury, but only Islam now keeps that faith. Professor Mervyn Lewis is a highly respected authority on (Western) banking and finance, and Latifa Algaoud is a senior official in Bahrain with a deep knowledge of Islamic banking institutions. Between them they present a highly readable assessment of Islamic banking from both (East/West) viewpoints, with a clear account of its history and principles, and its current position and state.’
– Charles Goodhart, London School of Economics, UK
‘Islamic banking has become a significant part of global banking. This is a very timely and well written book which successfully links the modern theories of conventional banking and financial intermediation and the theoretical and practical aspects of Islamic banking. By linking theory and practice, and setting Islamic banking in a wider analytical framework, the book will be invaluable to anyone with a theoretical, practical or regulatory interest in Islamic banking.’
– David T. Llewellyn, Loughborough University, UK
Contents
Contents: Foreword 1. An Introduction to Islamic Banking 2. Islamic Law 3. The Basis of Islamic Banking 4. Islamic Banking and Financial Intermediation 5. Islamic Financial Systems 6. Islamic Banking in Mixed Systems 7. Corporate Governance in Islamic Banking 8. Islamic and Christian Attitudes to Usury 9. Directions in Islamic Finance 10. Conclusions References Index
