Islamic Banking
Islamic banking and finance
Islamic banking is a financial system that complies with Shariah, or Islamic law, and is based on the principles of the Quran ¹ ². Islamic banking prohibits usury, speculation and gambling, and any investments involving items or substances that are forbidden in the Quran, such as alcohol, pork and pornography ¹.
The Islamic banking system operates on an equity participation model, where a bank’s profit is based on the success of the business it has invested in, rather than on the interest charged on a loan ¹. The Mit-Ghamr Savings Bank in Egypt, established in 1963, is considered the first example of Islamic banking in the modern world, as it used a profit-sharing model with its clients ¹.