Islamic Banking

Paper Summary:

The purpose of this study is to examine and assess the issues involved in any effort to implement Islamic banking as an alternative system of banking in the United States. The study pursues this purpose through the investigation of the following research questions: 1. Is it probable that Islamic banking and interest-based banking can co-exist within the economic structure of the United States? 2. Is the potential market for Islamic banking in the United States sufficiently large to make Islamic banking feasible in American society? 3. What laws, state and federal, require change to permit Islamic banking to operate in the United States?

Chapter 1
Introduction
Statement of the problem
Purpose of the Study
Key Factors for Investigation
Background on the Problem
Approach to the Investigation
Overview of the Study
Chapter 2
Literature Review
The Crucial Role of Interest
The Development of Banking Systems
Sources & Uses of Funds in Islamic Banking
Chapter 3
Method
References

From the Paper:

"Islamic economics has two principal components. The first component is a constant set of principles derived from the Qu`aran, which are the economic principles governing all Islamic activity, and which are unchanging. The second component is a flexible set of principles also derived from the Qu`aran, but which may be adapted to environment, time, or place, while remaining within the boundaries of the unchanging principles (El Araby, 1997). In Islam, any enterprise - economic or otherwise - may be an act of devotion, if entered into with the correct intentions. The welfare of the whole of the human race according to the will of God is the ultimate goal of all Islamic economic activity. The social responsibilities of business organizations are part of the moral obligations of the individuals operating such organizations in an Islamic society (El Araby, 1997). All economic systems are concerned with the relationship between the public and private sectors. In capitalist systems, the emphasis is on the private sector, although the degree of such emphasis varies between countries. One result of this capitalist emphasis is the cyclical recurrence of significant problems - inflation, unemployment, and recession, while a second result is an increasing concentration of productive capacity ownership into a relatively few private hands. Islamic economics assumes that no conflict exists or will develop between the public and private sectors, and that each sector works for the greater good of society. The applications of the principles of any system - capitalist or Islamic - are usually less than perfect. Therefore, conflicts do occur within Islamic economic systems; however, in Islam, the settlement of such conflicts is according to the criterion of the greater societal good, as opposed to settlement on an ideological basis of property ownership, political imperative or agenda, or similar factors that is often true in capitalist economies."

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