Islamic Banking

Islamic Banking

Mervyn K. Lewis and Latifa M. Algaoud

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.  

Foreword

Mervyn K. Lewis and Latifa M. Algaoud

Subjects: economics and finance, financial economics and regulation, islamic economics and finance, money and banking

Extract

It is usual to begin a book by explaining how it came to be written and, in the case of jointly authored works, how the authors came to form a team. The latter seems particularly pertinent, since one is an academic in Australia and the other a government official in Bahrain. In fact, the common ground was provided by the MBA programme at the University of Nottingham in 1996, although it soon became apparent that for this particular topic the roles of teacher and student might have to be reversed. It also seemed when we began to work together that we could bring a distinctive Arabic-Western perspective to a subject that is usually approached from one viewpoint alone. In keeping with this East-West approach, we have adopted a number of stylistic conventions. First, while we have for the most part preferred to use Arabic terms, for example, ‘ijara’ rather than ‘leasing’, we have adopted a minimalist form when transliterating the Arabic words, doing away with most of the diacritical marks that seem baffling to most Western eyes. A glossary of Arabic words is provided. Second, we have followed Common Era datings, rather than giving dates from the Muslim calendar (AH anno Hegirae, ‘from the year of the hijra’ in 622 CE, when the Muslim calendar begins). Third, when Muslims mention the Prophet Muhammad in speech or print, they usually follow the name with an expression in Arabic which can be translated, ‘May the peace and blessings of Allah be upon...