...Islamic And Conventional Banking banking in two groups as follows 1) Islamic Banking 2) Conventional Banking. 1.1-ISLAMIC BANKING. When we discuss about Islamic banking... Save Paper Islamic And Conventional Banking Practice conventional and Islamic bank as a conventional bank is a riba based bank and an Islamic bank is a profit based bank. Conventional banking... Save Paper Stability Of Islamic And Conventional Banks During The Financial Crisis Islamic or conventional banks however, it has generally been seen that while conventional banks were wiped of several billions of dollars, Islamic banks ... different... Save Paper The Comparison Between Islamic Loans And Conventional Loans In Relation To Market Power Islamic economics and Islamic banks have grabbed the attention of millions of people around the world. That is because Islamic banks... Save Paper Comperative Study Of Corporate Social Activities Of Bank And Non Bank Financial Institute banks. Importance of Corporate Social Responsibility Abstract Companies are, in a broad sense, a group of different ... etc.), driving up efficiency; gaining new... Save Paper Is It Necessary To Combine Investment Banking And Commercial Banking? banks and investment banks to function as two different units. GSA was targeting to prevent banks... Save Paper Mobile Banking In Brack Bank banking event, the Excellence in Retail Financial Services Convention. Mr. Abdur Rahman, Head of Branch Banking of BRAC...
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...Prospects and Problems of Islamic Banking from Bank’s Perspective: A Study of Bangladesh Dr. Muhammad Z Mamun 1 This paper focuses on the prospect and growth potentials of Islamic banks in Bangladesh as perceived by Islamic and conventional bankers. The study noted that there is a high demand for interest-free banking services from a segment of people in Bangladesh who have a strong desire to abide by the rules and principals set by Shariah. Along with religious requirement, economic exigencies provide a new outlook to the role of banking in promoting investment/ productive activities, influencing distribution of income and adding stability to the economy. The Islamic banking sector is, however, criticized on several grounds by the Conventional bankers. The banks are believed not to apply the rules of Shariah completely. Islamic banks are said to include interest in their dealings to compete effectively with the Conventional banks. Moreover, conventional banks offering Islamic banking as a parallel service are thought to do so only to add to their profitability, by attracting people who value the Shariah based system by enjoying the advantages of the special treatments from the Central bank. According to the survey, suitable and supportive legal framework would facilitate better growth of this sector. Moreover, the lack of an inter-bank money market and sufficient supportive and link institutions in the sector, act as impediments to growth of Islamic banking. Also, banks perceive the...
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...has not only shed doubts on the proper functioning of conventional “Western” banking, but has also increased the attention on Islamic banking.1 Academics and policy makers alike point to the advantages of Shariah-compliant financial products, as the mismatch of short-term, on-sight demandable deposits contracts with long-term uncertain loan contracts is mitigated with equity elements. In addition, Sharia-compliant products are very attractive for segments of the population that demand financial services that are consistent with their religious beliefs. However, little academic evidence exists on the functioning of Islamic banks, as of yet. This paper describes some of the most common Islamic banking products and links their structure to the theoretical literature on financial intermediation. Specifically, we discuss to which extent Islamic banking products affect the agency problems arising from information asymmetries between lender and borrower or investor and manager of funds. Second, we compare the business model, efficiency, asset quality and stability of Islamic banks and conventional banks, using an array of indicators constructed from balance sheet and income statement data. In separate regressions, we focus specifically on the relative performance of both bank groups during the recent crisis. While there is a large practitioner literature on Islamic finance, in general, and specifically Islamic banking, there are few academic papers. Cihak and Hesse (2010)...
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...The importance of banking is paramount in an economy. There is a clear distinction between conventional and Islamic banking. Conventional banks are charging interest through lending and accepting the deposit for interest. But interest (Riba) is strictly forbidden in Islam as evident in this verse “And because of their charging riba while they were prohibited from it.” (Quran, An-Nisaa 4:161). So Muslims established their own Riba free financial institutions separately to the conventional banking system. The growth of Islamic Financial Institutions became strong at the Conference of Foreign Ministers of Muslim countries to establish Islamic Development Bank in 1975 (Islamic Development Bank [IDB], 2017). The Islamic banks have gone through tremendous...
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...Furthermore, customer’s attitude toward a product or service is influenced by a match of the product or service user image with the customer’s self-concept . Islamic banking which started in 1983 in Malaysia, refers to a system of banking that complies with Islamic law which also known as Shariah law. The underlying principles that govern Islamic banking are mutual risk and profit sharing between parties and the assurance of fairness for all transactions based on an underlying business activity. It does not allow any transactions based on interest (riba), gambling (maisir) and speculative trading (gharar) at all cost. In terms of products and services, there are more than 40 Islamic financial products and services that may be offered by the banks using various Islamic concepts such as Mudharabah, Musyarakah, Murabahah, Al-Bai Bithaman Ajil, Al-Ijarah, Al-Takjiri, Qard Hasan, Al- Wakalah, Al-Kafalah and Wadiah. This study was stated the most perception of Islamic banking product among the Malaysian customer. As one of the important in service industry today, Islamic banking is no longer regarded only to fulfil the religious obligation of the Muslim. It is also how the Islamic banks want to market their products towards the non-Muslim community in Malaysia. 2.0 FACTORS INFLUENCING THE PERCEPTION OF ISLAMIC BANKING 2.1 Religion The religious value includes factors like Islamic bank is not involved in any regulations or acts against shariah that could spiritually burden customers...
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...and growth potentials of Islamic banks in Bangladesh as perceived by Islamic and conventional bankers. The study noted that there is a high demand for interest-free banking services from a segment of people in Bangladesh who have a strong desire to abide by the rules and principals set by Shariah. Along with religious requirement, economic exigencies provide a new outlook to the role of banking in promoting investment/ productive activities, influencing distribution of income and adding stability to the economy. The Islamic banking sector is, however, criticized on several grounds by the Conventional bankers. The banks are believed not to apply the rules of Shariah completely. Islamic banks are said to include interest in their dealings to compete effectively with the Conventional banks. Moreover, conventional banks offering Islamic banking as a parallel service are thought to do so only to add to their profitability, by attracting people who value the Shariah based system by enjoying the advantages of the special treatments from the Central bank. According to the survey, suitable and supportive legal framework would facilitate better growth of this sector. Moreover, the lack of an inter-bank money market and sufficient supportive and link institutions in the sector, act as impediments to growth of Islamic banking. Also, banks perceive the availability of training and education on Islamic banking to be inadequate in Bangladesh. To deliver superior services to the clients and to...
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...ISLAMIC BANKING SYSTEM & PRODUCTS Name Course Instructor Institution Date Islamic banking Introduction Over the past decades, Islamic banking has expanded into a distinctive and fast growing competitive substitute to conventional banking in many countries. Despite the rapid expansion of the Islamic banking system in recent years, little is however understood of how it differs from conventional banking systems, especially in the non Muslim world. Although Islamic banking works in accordance with the Islamic laws (shariah), in other countries, they are allowed to operate incomparably with the conventional banks that are interest based. The desire of Muslim communities to reorganize their social economic activities, and revival of financial institutions such as Zakah on an interest free basis can be said to be the main drivers to the development of Islamic baking over the past (Wilson, 1994: 110). Nevertheless, Islamic banking is not a religious product as it may insinuate, but it can rather be understood as a series of growing financial products that are developed with the aim of meeting the requirements of Islamic culture and its people (Sole, J. A., 2007: 6). Thus theses systems have developed so as to enable Muslims to invest savings and equally raise finance without compromising their religious and ethical practices. In order to comprehend the fundamental principles of operation of the Islamic banking system, it is thus necessary to understand what it is. There is...
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...Bank Employees Perceptions on Islamic Banking Acceptance Abstract This research was conducted to investigate bank employee perceptions on Islamic banking acceptance. The questionnaires were distributed to bank employee at Maybank Islamic Wangsa Maju (Islamic bank) and Maybank Setapak (Islamic window) Kuala Lumpur. Interestingly, few of the bank employees possessed a relevant academic background or relevant experience in banking on this career. The bank employee also claimed that they had very limited knowledge in this area prior to working with the banks; thus, the issue of the availability of well-trained and skilled employees must be addressed critically by the government, industry players and educationists for the sustainable growth of Islamic banking in Malaysia, and to meet the target set for the year 2011. Keywords: Bank Employees perceptions, Islamic Banking, Product & Service, Training & Experience 1.0 INTRODUCTION 1.1 Background of study In 1970, Islamic banking was almost unknown and considered to be wishful thinking. By the early years of the twenty-first century, however, Islamic banking the deniable truth has emerged, for it is growing at a steady pace. The size of the industry, which amounted to a few hundred thousand dollars in 1975, had reached billions of dollars by 2004. The value of Shari’ah-compliant accounts worldwide is estimated between US$200 billion and US$500 billion and is growing at an average annual rate of 10-15 per cent. It is predicted...
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...All you need to do is to answer all the questions for the different discussions (200 words each) Topic 1: What factors affect the consumer's perceptions of fast food and its services? Summary: The two studies by M.K. Brady et al and Kim et al are concerned with the same question: what factors affect the consumer’s perceptions of fast food and its services? But while Kim et al. focuses on American college students to find out what factors that segment finds favourable in a fast-food service, M.K. Brady et al takes their study to the international level to find out how different cultural values can affect the consumer’s behavioural intentions relative to the fast-food industry and its services. Both articles agree that the majority of America customers prefer to trade-off between quality of services and expenditure required (expense-conscious). The American consumer tends to judge consumption of goods and services with a ‘neutral’ and logically based mindset; always asking the question of “is it worth my money?” Kim et al claims that due to relatively inexpensive, quick and convenient service, fast-food is becoming more and more popular among college students in North America. How could restaurants attract this emerging market? Further discussing in particular the college student market, and selecting Wendy’s, Burger King and McDonald’s as target examples will figure out the way to attract college students in fast-food services restaurant. Several factors are taken into consideration...
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...and conventional Finance principles. In order to do this, firstly it is necessary to determine the scope and establish some of the fundemental concepts that define Islamic Finance, or "Sharia compliant banking" as it is often referred to. After this, it will be possible to discuss some of the advantages that Islamic Finance institutions have over the typical conventional banks. As of 2014, Islamic Financial institutions represented around 1% of the total assets throughout the world, with an estimated value of around $2 trillion. There exist in the region of around 300 institutions throughout the world that adopt a financial approach dictated by the principles of Islam. This number has been growing as a result of the financial crash in 2008 where many conventional banks faced liquidity issues; investors disillusioned with the performance and practices of conventional banks increasingly sought to invest their assets with Islamic Finance institutions. However, the fact that only 1% of institutions currently adopts the Islamic Finance approach shows that conventional banking methods are still more popular with investors and institutions alike. Most of the Islamic Finance institutions are based in the Middle East, but there has been a significant increase in Islamic Finance institutions in the main financial centres of this world (London, Shanghai and New York). The following table displays some of the similarities and differences between Islamic and conventional banking: ...
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...Impact of Interest Rates on Islamic and Conventional Banks: The Case of Turkey Erge¸ Etem Hakan and Arslan Bengul Gulumser c ¨ ¨¨ January 2011 Online at http://mpra.ub.uni-muenchen.de/29848/ MPRA Paper No. 29848, posted 4. April 2011 06:17 UTC Impact of Interest Rates on Islamic and Conventional Banks: The Case of Turkey Etem Hakan Ergeça* and Bengül Gülümser Arslanb Abstract Identifying the impact of the interest rates upon Islamic banks is key to understand the contribution of such institutions to the financial stability, designing monetary policies and devising a proper risk management applicable to these institutions. This article analyzes and investigates the impact of interest rate shock upon the deposits and loans held by the conventional and Islamic banks with particular reference to the period between December 2005 and July 2009 based on Vector Error Correction (VEC) methodology. It is theoretically expected that the Islamic banks, relying on interest-free banking, shall not be affected by the interest rates; however, in concurrence with the previous studies, the article finds that the Islamic banks in Turkey are visibly influenced by interest rates. JEL classification: G21; E52 Keywords: Interest-free banking, monetary policy I. Introduction Islamic banks1 are defined as financial institutions that rely on the principle of Profit and Loss Sharing (PLS) with the entrepreneurial partners in their relevant banking activities (Nienhaus, 1983, p. 31). From...
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...It receives the money from one group and lends to other group of people. So bank performs the duty of financial intermediary. Usually there are two types of banks, conventional banks and Islamic banks. In simple words Islamic banks operate in interest free system. Prohibition of interest is ordained in Islam in all forms and intent. This Prohibition is strict, absolute and unambiguous. The Holy Qur'an in verse 278 of Surah Al-Baqarah states: "O ye who believe! Fear Allah and give up what remains of your demand for Riba, if ye are indeed believers." Verse 2: 279 says: "If you do it not, take notice of war from Allah and His Messenger. But if ye turn back, ye shall have your capital sums. Deal not unjustly and you shall not be dealt with unjustly." It therefore, follows that interest is prohibited as it leads to injustices and Islam is against all forms of injustices and exploitations and pleads an economic system, which aims at securing extensive socio-economic justice. The Islamic law of prohibition of Riba, which includes interest, was originally not based on economic theory but on Divine Authority, which considers the charging of interest as an act of injustice (Dr. Siddiqui). Islamic banks appeared on the world scene as active players two decades ago. But many of the principles on which Islamic banking is based have been commonly acceptable all over the world for centuries rather than decades, as it is evident that Islamic finance was practiced predominantly in the...
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...Islamic Banking: Answers to Some Frequently Asked Questions 9 ISLAMIC DEVELOPMENT BANK ISLAMIC RESEARCH AND TRAINING INSTITUTE ISLAMIC BANKING: ANSWERS TO SOME FREQUENTLY ASKED QUESTIONS Mabid Ali Al-Jarhi and Munawar Iqbal Occasional Paper No.4 1422H 2001 Mabid Al-Jarhi and Munawar Iqbal 10 Islamic Banking: Answers to Some Frequently Asked Questions 11Mabid Al-Jarhi and Munawar Iqbal 12 Islamic Banking: Answers to Some Frequently Asked Questions 13 FOREWORD In the last quarter of a century, there has been a great interest in the Islamic banking system both at private and public levels. There is an earnest and widespread desire to understand the system. Academicians, bankers and general public, all, have some genuine questions and concerns. Policy makers in the monetary and financial sectors of the IDB member countries have also often asked the Islamic Research and Training Institute (IRTI) some basic questions of theoretical and practical importance about the elimination of interest from the national economies of Muslim countries and the transformation of the prevailing conventional system to an Islamic one. Some of these questions reflect a desire to understand the basic concepts of Islamic finance while others relate to the creation of an enabling environment through macroeconomic reform and structural adjustments that are needed to establish the Islamic financial system and the complications that arise when an effort is made to bring about the transformation...
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... a comparative analysis is done between AR-RAHNU with conventional pawnshop. Since this study was done at AR-RAHNU Bank Rakyat, thus the background also will cover a little about Bank Rakyat and then goes through its AR-RAHNU system. In this chapter, problem statement, objective of the study, scope and significance of the study also be presented. 1.1 Background of Study People say diamonds are women’s best friend while gold jewelry is their true friend. In reality, this is at least true among Malaysian women. The reason is, other than to enhance women’s look, the jewellery also could be functioned as collateral whenever cash is needed by using pawn broking financing. As we can see, pawnshop has become a common activity to Malaysian especially among the Malays community and has an overwhelming responses among the poor and middle class in Malaysia to have financial sources quickly and easily. On that basis, many pawnshops and pawnbrokers exist to offer this service. Pawnbroking is a business of advancing loans to customers who have pledged their personal belongings as security. The pawnbroker's trade is one of the oldest known, having existed 2,000–3,000 years ago in China, as well as in ancient Greece and Rome. 1.1.1 CURRENT SCENARIO Among the current scenarios that exist and practiced in our country these days are: * There are many financial institutions which had offered services by practicing conventional financial transaction which are totally contradict with...
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...Jurnal £kollomi Malaysia 35 (2001) 61 - 68 Interest Rate and Loan Supply: Islamic Versus Conventional Banking System Liza Marwati Mohd Yusoff Aisyah Abdul Rahman Norazlan Alias ABSTRACT This paper attempts to explore the effect of interest rate 011 loan supply of Islamic banking alld Convemional banking system. The analysis segregated the Islamic and COllvellfional banking system imo commercial bank, finance company alld merchant bank. Overnight alld 3 month Klibor are llsed as interest proxy. Unit root test, Granger Causality test, Akaike Information Criterion and Regression analysist are IIsed in the study. The results of Granger Causality test indicate that the growth of overnight Klibor ca uses changes in the growth of Islamic and Conventional loan of Mercham Banks significantly and from the regression analysis, it is confirm that Islamic and Conventional loan growth of merchant bank are significantly positive related to overnight Klibor. INTRODUCTION The additional amo}Int a borrower pays a lender, over and above the borrowed sum (principal) is commonl y called interest. This interest depends on the size of the principal and the length of time the borrower takes to repay the principal and interest. For this reason, and for computational convenience, interest is usually expressed in terms of percentage per annum and is called the rate of interest. In banks there are three players. The players are the bank, the depositor and the borrower. The depositor places...
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