A Comparison of Key Dimensions in Conventional and Islamic Banking: An International Perspective with Implications for the Bank Transformation Process in Libya

Abstract

Shariah-compliant or Islamic banking is new one of the fastest growing financial services sectors worldwide. While Muslims view this banking model as providing a religious-based alternative to the financial products and services offered by conventional banks, they are also an alternative banking system either fully or partially adopted by banks in more than fifty countries. The premise of Islamic banking is entirely based on the principles of Shariah (Islamic) law that prohibits contracts that involve interest (Riba), uncertainty (Gharar), gambling (Maysir), injustice (Dhulm) as well as the practice of other noncompliant products and services. Nevertheless, despite these apparent restrictions on their activities, the number of international institutions converting their operations in full or in part to Islamic banking is steadily growing.