Journal Article

Does the Islamic Banking Industry Represents Islamic Economic System?

Dirvi, Abdul Wahab Sultan

2021

Overview

This paper addresses the central question of whether the Islamic banking industry truly represents the broader Islamic economic system. The author argues that while Islamic banks are the most visible institutions of Islamic finance, they do not necessarily reflect the full scope of the Islamic economic paradigm, which is grounded in principles of social justice, solidarity, and human development. The study outlines the intellectual foundations of the Islamic economic system, emphasizing that it extends beyond the prohibition of interest (riba) to include wealth redistribution, protection of vulnerable groups, and balancing individual and collective interests. It then analyzes the limitations of the current Islamic banking experience, which has largely focused on replicating conventional products through contracts like murabaha and ijarah, while paying less attention to instruments that fulfill the developmental and social goals of the Islamic system. Challenges such as competitive pressures, the need to comply with global banking regulations, and weak integration with zakat and waqf mechanisms are also highlighted. The conclusion asserts that Islamic banking represents only a component of the Islamic economic system, and that a broader vision incorporating diverse economic and social tools is necessary to embody the core values of Islamic economics. Abstract Written by Dar AlMandumh, 2025, Using AI

• Publisher: المجلس العام للبنوك والمؤسسات المالية الإسلامية
• Subject: الاقتصاد الإسلامي / الدول النامية / الصناعة المصرفية الإسلامية / الصيرفة الإسلامية