What distinguishes Islamic banking from Western?

A main difference between Islamic and western banking consists in their ways to process the transactions. In Islamic banking either credits or deposit are interest-free. It resembles mostly project financing related to risk sharing and partnership basis.

Is Islamic banking effective?

The general conclusion is that Islamic banks are less efficient, have higher intermediation ratios and higher asset quality, and are better capitalized. The latter two indicators in particular have helped Islamic banks outperform during the financial crisis.

What makes Islamic banks different from traditional banks?

Conventional banks are in the business of lending & borrowing money based on interest. Islamic Banks are not money lending institutes but they work as a trading/ investment house. Generally Conventional Banks do not involve themselves in trade and business as they act only as money lenders.

What do you understand by Islamic banking system?

Nature of Islamic Banking Islamic finance is a financial system that is based on adherence to the Sharia or Islamic law. There is no real ‘lending’ in Islam since all ‘lenders’ obtain ownership interests in the assets that they finance, or earn a profit-share or purely fee-based remuneration.

Is Islamic banking good for economic growth?

Similarly, asset quality of Islamic banking industry has no impact on the economic growth of the country. The reason is that the asset quality of Islamic banks is equivalent to the asset quality of conventional banks and it has no independent impact on the economic growth of Pakistan.

What is Western banking?

Western bank is a title used by various financial institutions. It may refer to: Canadian Western Bank (CWB), a bank in Edmonton, Alberta, Canada. Bankwest, a bank in Perth, Australia. Great Western Bank (California), a bank formerly located in Chatsworth, California, until it was acquired by Washington Mutual in 1997.

What is the difference between Islamic banking and commercial banking?

They have different types of accounts, locker facility for customers. Commercial banking is based on manmade rules and focus on interest financing. Islamic banks perform functions as commercial banks but they follow the rules of Islamic Sariah board. Islamic banking is the interest free banking.