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Islamic Banking Operations and Instruments
Finance & Accounting
Pages 30 (7530 words)
Islamic Banking Operations and Instruments 1. Introduction The structure and the operational rules of banking institutions are depended on their needs and resources but also on the local ethics and economic/ political trends. For example, in countries where emphasis is given on borrowing as means for covering personal and business needs, the banks and other financial institutions established locally would be able to respond to the above trend.
Indeed, culture has been traditionally related to society and its intervention in economic life has been rather unexpected. Islamic banks follow specific rules. These rules mostly reflect the Islamic law, also known as Sharia law. Following these rules is considered as obligatory for the Islamic financial institutions. However, it is possible for additions to be made, according to the needs of the local market and always within specific limits, as explained below. The differences of Islamic banks from conventional banks, meaning the Western banks are many. These differences are analyzed in the sections that follow. The paper focuses on all aspects of Islamic banking, including the principles and types of their daily operations but also the instruments that these financial institutions use for aligning their activities with the rules of the Islamic law. ...
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