Got a tricky question? Receive an answer from students like you! Try us!

Islamic Banking as a banking system that follows the ways of Islam - Essay Example

Only on StudentShare
Ph.D.
Essay
Finance & Accounting
Pages 10 (2510 words)

Summary

Islamic Accounting Table of Contents Introduction 3 Ijarah 3 Usage of Ijarah Contract in Islamic Financial Institutions 4 Similarities and Differences Between Conventional and Ijarah Leasing 6 Accounting Treatments for Ijarah 8 AAOIFI Standards and IFRS for Ijarah Contract 8 Conclusion 9 Introduction Islamic Banking involves a banking system that follows the ways of Islam…

Extract of sample
Islamic Banking as a banking system that follows the ways of Islam

As such, financial products are also designed according to such principles. Accumulating wealth is not against the law, but making money through unfair or fast means is not supported. Although Islamic banking is conservative in many ways, it is also safe. In Islamic banking, all transactions must be interest-free. There are several sets of rules for transactions, leasing, joint ventures, and partnerships. These laws are formulated with the Islamic religious sayings of the Quran and religious scholars in mind. In Islamic Banking, an Ijarah denotes the activity of leasing a property, is conducted by the bank. The bank takes possession of the property from its owner and leases it to a third party for rent; no interest is charged, as per the stated norms of Islamic banking. Even the maintenance cost is borne by the bank. The Islamic regulation is against making money through unfair means. For example, if the lessee pays a fine for late payment, the money goes to charity, not to the bank. Transactions in Islamic banking are considered Salam if the buyer pays the full amount to the seller. It is important that the buyer demonstrate that he is not in debt. Islamic banking offer many products that must be passed by the Shariah Supervisory Board. ...
Download paper
Not exactly what you need?

Related Essays

Islamic Financial System as an Effective Planning & Control Framework in Kuwait
Planning helps in arranging the required business operations in a sequence which facilitates in carrying out the functions in an effectual way. The control process refers to the activities of handing over, assessing and modifying resources on a constant basis for the reason of attaining the intended goals of a particular organization. Similarly, the function of control has been referred to a procedure that is supposed to be undertaken by the organization or its managers with the purpose of making certain that the definite performance obey the rules as specified in the plans of the…
Islamic Banking Operations and Instruments
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…
30 pages (7530 words)
Banking System in America
In the United States of America, separate financial regulatory structures are in place to regulate the Insurance and financial securities aspects of the banking sector at the State and the Federal level and. these regulatory agencies are controlled by the Federal government in conjunction with the State governments. In the United States of America, there are laws that are enacted to prevent money laundering, anti-terrorism laws, laws that are meant to prevent usury lending, anti-fraud and privacy laws, and laws to promote lending of money to people with small incomes, all this fall under the…
7 pages (1757 words)
Mudarabah in Islamic Banking
It is the means by which bonding is done between two participants such that one of them is the financer and the other is the manager or the mudharib. While the investor or the RabbulMal is responsible for any losses made in the transaction the Mudharib suffers only the loss of the efforts put by him. The bank often acts as the Rabbul Mal or the capital provider who provides capital to the entrepreneur. The funds provided by the bank can be used by the entrepreneur upon his discretion. The profit attained by using rabbul mal’s funds would be divided amongst the investor and the user with…
Islamic Banking
Islamic Banking is a type of banking that is constantly based on the Islamic or Shariah law and its implementation is through the growth of Islamic economics. This type of banking system prohibits the fixed payment interest on loaned money and it also shuns the investment in the business that cater goods and services that are considered unlawful in Islam. Today more than 200 Islamic financial institutions exist around the world (Iqbal and Llewellyn, 2002). Ahmad El Najjar pioneered the first Islamic bank that came into existence in Egypt, in 1963. Thus, when 1976 ended, there were nine banks…
6 pages (1506 words)
Differences between Islamic and Conventional Banking
This is seen even in the manner in which their education system is run. They follow the Shariah law in everything they undertake so that the system cannot be corrupt by any foreign or western influence. Conventional banking may not be strict in the monitoring of any religious laws, but they must have a code of conduct to guarantee the smooth operations of the organization. This paper will scrutinize the contrasts between the two types of banking, and differentiates them, even in this day and age. …
3 pages (753 words)
Banking
Although a preferred means of solving the inherent challenges in the current banking industry, the reality is that it has its own disadvantages, as discussed in this essay. According to economists, there are a number of benefits of banks consolidation. One of these advantages is increased efficiency in the banking sector. Consolidation eliminates geographical restrictions in the banking industry, exposing it to high levels of competition, driving out all inefficient banks from the industry. This is not the only way of ensuring efficiency in the banking sector; moving to larger banking…
5 pages (1255 words)