...the presence of one important economic instrument which has different system of management hence to show the similarities and differences between these instruments. Islamic and conventional banks are all banks but having different system of managements, aspects, history, products and even acceptance according to laws. The research will discuss these aspects and more to make people aware of these instruments so as to remove the confusion on them and make them choose the best with the best reasons. This study will be divided in to three chapters. Chapter one will be all about Islamic and Conventional banks, theirs nature, history, products offered and many more. Chapter two will discuss and show the similarities and differences of these banks. Chapter three as the final chapter will discuss the case study of Islamic banks in Tanzania. I pray to Allah to make this study be the sources of awareness about these banks especially in Tanzania where by people haven’t got exactly meaning and differences of these banks. 2) JUSTIFICATION OF THE RESEARCH: i. The research will define, show and explain the short history of Islamic and Conventional banks. ii. This research will show the comparison of Islamic and Conventional banks. iii. The research will show roles and activities of Islamic and Conventional banks in the community. iv. In this research products offered by these banks will be...
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...ISLAMIC AND CONVENTIONAL BANKING PRACTICE Abstract: A major negative feature of Capitalism is it helps rich and neglects poor. The movement of Capitalism is helped by interest based banking. Interest based banking is strives to secure their provided fund and get the profit without taking any risk. Such activities are helpful for those who have asset to prove that they are secure for any fund to be provided. To change this type of philosophy profit based bank is a very strong competitive at the market, which bear the risk to make the profit. There have many problems on the way of operation of profit based bank. In which area verity of religion is present among the people the problem is stronger. Many people take it easily because it is the part of their religion and many people refuse it because it has no importance in their religion. In Sylhet Islamic Banking faces many problem in operation. Introduction: Sylhet is the city in northeastern part of Bangladesh having variety of people from different religions. Sylhet is a holy place for both Muslim and Hindus. Followers of Different religions in this city are: Muslim 81.16%, Hindu 17.80%, Christian 0.06%, Buddhist 0.02% and others 0.96%[6]. Remittance is the key element of the economic growth of Sylhet the money is sent by the people living abroad from the city. The commercial banks have deposits of 4,000 crore taka in Sylhet [7] .They distribute this deposits among the people seeking loans. In Sylhet city...
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...Differences and Similarities in Islamic and Conventional Banking Muhammad Hanif Assistant Professor, National University of Computer & Emerging Sciences, Islamabad PhD-Finance Scholar at International Islamic University, Islamabad, Pakistan E-mail: muhammad.hanif@nu.edu.pk Abstract Islamic Banking is growing at a rapid speed and has showed unprecedented growth and expansion in last two decades in spite of mismatching of existing financial framework and business practices. By the end of 2008 volume of Islamic banking has reached to US $ 951 Billion with operation in more than 50 countries. Middle East is the centre of Islamic banking with contribution of approximately 80% while 20% share is contributed by rest of the world. In Pakistan Islamic banking is at infant stage although last 6 years growth is marvelous. Islamic banking has grown at an average annual rate of 76% in the last six and half years (12/03 - 06/10) in Pakistan. Although Islamic banking faces multi challenges however three of them are very vital for its existence. First is Sharia compliance in its operations in an environment which is dominated by interest based practices even in Muslim societies. Second is perception of financial industry practitioners about its performance whether the system is able to serve the total needs of trade and industry. Third is the perception of a large majority of Muslims whether existing practice of Islamic banking is Sharia compliant or mere copy of conventional practices under the banner...
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...four core areas of profitability, liquidity, credit risk and solvency through simple sectoral averages for both streams of banking. Table 1: Financial Performance of Islamic Vs Conventional Banking |PPERFORMANCE MEASURES |CONVENTIONAL BANKS | | | | | |ISLAMIC BANKS |COMMENTS | |Profitability | | | |Conventional Banking is dominating in | | |profitability | | | | | | | | |Conventional banking is dominating in liquidity | | ...
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...8th International Conference on Islamic Economics and Finance 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...
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...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 availability of training and education on Islamic banking to be inadequate in Bangladesh. To deliver superior services...
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...PERFORMANCE OF Islamic bank Versus CONVENTIONAL BANK (A COMPARATIVE STUDY) A RESEARCH REPORT SUBMITTED by SAAD SIDDIQ to University of Karachi in partial fulfillment of the requirement for the degree of BUSINESS ADMINISTRATION In MARKETING This thesis has been accepted for the faculty of UNIVERSITY OF KARACHI ACKNOWLEDGMENTS Thanks to Allah the All Merciful the all Benevolent for providing me the strength, courage, direction and skills to learn, acquire knowledge, and the ability to accept and meet challenges. Second I would like to thank all those people who have helped me in performing this research study.. I would like to give credit for those who gave their precious time to conduct the interview session and to those who filled the questionnaires. I would like to express my sincere gratitude to my supervisor Sir Mehmood Qasim for providing me his precious time, guidance, and instructions all along in order to materialize my content for the report.I am also thankful to my parents who accommodated me during those long hours of work in my project development and all the friends and colleagues who helped me out in my times of weakness and encouraged me. I am hopeful that the effort will be fruitful for the students to come in KU after us. Once again, I am very thankful to all people who have been involved in this thesis report directly or indirectly. Abstract This project compares the performance of Islamic banks and conventional bank in...
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...Report On Comparative Performance Study of Conventional and Islamic Banking in Bangladesh Course Title: THEORY AND PRACTICES OF BANKING IN BANGLADESH Course Code: FBK 312 Submitted To: Md. Nur Nabi Assistant Professor Department of Finance and Banking Faculty of Business Administration and Management Patuakhali Science and Technology University Dumki, Patuakhali- 8602 Submitted by: Group: C (Level: 3, Semester: I) Session: 2012-2013 Faculty of Business Administration and Management Patuakhali Science and Technology University Dumki, Patuakhali- 8602 Date of Submission: 09th May 2015 ------------------------------------------------- Roll No | Registration No | Name of the Students | Signature | 1203051 | 03596 | Nusrat Jahan Rupa | | 1203053 | 03598 | Nusrat Yesmin | | 1203054 | 03599 | Nisath Salsabil Urmi | | 1203056 | 03601 | Mehedi Hasan | | 1203057 | 03602 | Hasan Shahria Nayeem | | 1203060 | 03605 | Khondokar Tanveer Ahsan | | 1203061 | 03606 | Sume Akter | | 1203062 | 03607 | Rased Amer Sohag | | 1203065 | 03610 | Nusrat Jahan Pinki | | 1203067 | 03612 | Rasel Miah | | ------------------------------------------------- Group Member Details ------------------------------------------------- ------------------------------------------------- ATTENDANCE REPORT 1) Level : 3 2) Semester : I 3) Course Code : FBK-312 4) Course Title : THEORY AND PRACTICES OF BANKING IN BANGLADESH 5) Date Of Presentation...
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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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...Risk Management in Islamic and Conventional Banks: A Differential Analysis Salman Ahmed Shaikh* Dr. Amanat Ali Jalbani Abstract Islamic banking is interest-free banking which makes it necessary for Islamic banks to take active part in the operations of the business, i.e. share profits as well as losses. Banks including Islamic banks prefer to take minimum risk. On the surface, it may seem that Islamic banks face more risk and hence, will have more volatile or even negative returns on their assets. This paper analyzes the risk management procedures of Islamic banks by giving a differential analysis of risk management discussing only the unique characteristics of risk management in Islamic Banking. The usual credit assessment procedures and BASEL are not discussed. This paper looks at the comparative performance of Islamic banks and conventional banks by using ROE as the benchmark. Keywords: Risk management, commercial banking, Islamic banking, price risk 1. Introduction 1.1. Background of the Study Islamic Banking was first introduced in 1959 in Egypt. Since then, Islamic Banking is growing rapidly throughout the world and has been introduced in more than 60 countries of the world so far. Global financial players like Citibank, ABN AMRO, American Express Bank, HSBC, etc. are also participating in Islamic Banking and Financial Industry. However, skepticism still surrounds Islamic Banking keeping into view the earlier demise of BCCI. Profit and loss sharing...
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...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...
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...Archive 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)...
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...this research is to find out if Islamic Banking is a better alternative to the Western, Conventional Banking. The information provided will reveal various Islamic Banking principles that would have prevented previous major economic crises and if applied globally today could prevent a major economic collapse. Islamic Banking is banking system based on Shari'a (Islamic) Law on which it developed its unique characteristics that will be discussed in this paper. Shari'a Law does not allow the use of Interest (Riba), trading in financial risk, and investing in businesses that are considered unlawful according to the Quraan and Islamic scholars. Shari'a law in Islamic Banking is meant to promote economic and development through the means of disciplined investing, fair risk sharing, and profit or loss sharing (Warde, 2000). The literature that will be examined in this paper will show that Islamic Banking is a good alternative to the current global banking system, however, it will be near impossible to revamp the existing banking system and replace it with Islamic Banking because it goes against many of the core principles of conventional banking that the global economy is built on which has been around for decades. Brief History The main goal of Islamic banks was to promote social and economical welfare in society through guiding investors and offering financial assistance to businesses by engaging in profit sharing transactions (Warde, 2000). Islamic banks were thought of as more...
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...People Perception of Islamic Banking Muhammad Sohail Bhatti Student MS Islamic Banking & Finance University of Management & Technology Abstract: This research was conducted to gauge the perception of general public about Islamic Banking in Pakistan. Questionnaires were distributed to customers of Islamic Banking and conventional banking. The results revealed that most of the people do not have adequate knowledge of the concepts of Islamic Banking. Some of the participants did not even know that “Riba” is forbidden in Islam. Less awareness about the Islamic banking concepts can be the main cause of negative perception among general public. This study also revealed that many people think that Islamic banks have not played their proper role in creating the awareness and knowledge about the concepts and working of Islamic banking. The study might help the Islamic Banks to reconsider their marketing strategies so that the negative perceptions of the general public may be changed to a positive one. Key Words: Islamic Banking, Perception Introduction: Islamic Banking is relatively new concept as compared to conventional banking. The history of conventional banking dates back to about two hundred years. Whereas Islamic banking is only in its infancy stage and started only about 17 years ago. People are so used to the conventional side of the banking that it is a little hard for them to understand the Islamic Banking concepts and the working and services offered by them...
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...Benefits The idea of Islamic banking was initiated and brought up by some economists who were conscious about socio economic development of Muslim nations based on Islamic principles. It was based on noble vision and objective of Islamic banking base on profit and loses sharing principle. The foundation of Islamic banking theory that they proposed was based on mudaraba and musharakah contracts as mechanism to operate Islamic banking system. “The early contributions on the theory of Islamic banking were only discussed as part of the subject in Islamic economic system. For example, the book by Qureshi on Islam and the Theory of Interest (Qureshi (l946)) which looked upon banking as a social service that should be sponsored by the government like other public institutions such as public health and education.2 His view was based on the point that the bank could neither pay any interest to account holders nor charge any interest on loans advanced. He also suggests the possibility for both Islamic banks and entrepreneur to create a partnership. No mention was made of profit-sharing.” Other economists were come up with different ideas at earlier stages such “the principle of mudarabah was appealed systematically by Uzair (l955). His main contribution lay in suggesting mudarabah as the main premise for 'interest less banking'. However, his argument that the Islamic bank should not make any capital investment with its own deposits rendered...
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