In the last years, Islamic Banks have grown in size and number around the world. The interesting topic here is that these kind of institutions doesn´t allow charging interest because as the quoran says: “Allah forbids Riba and permits trade”. Riba is a kind of return over financial procedures. So, most of the Islamic banking are not based on profit sharing but in debt like instruments.
There are Islamic banks in over 60 countries. And in states like Iran, Pakistan and Sudan the whole system has been converted to Islam banking. The success of Islamic banking is shown in its growth rates of more than 15%. That is one of the reasons why conventional banks have started offering Islamic financial contracts.
An example of these kind of debt-like contracts are the SUKUKS. They are Islamic debt instruments such as the conventional bonds. They are also known as “trust certificates” or “participation securities”. Like the capitalist bonds, sukuks are issued in exchange for loans to the issuer and technically it obligates the issuer to pay to the holder a sum of money but it must not contain interest, otherwise it must be punished.
Some researchers expects that Islamic banks will promote growth in Islamic countries by providing long-term financing to growth-oriented sectors of the economy.
To conclude, we have seen even that the Islam is very severe with its religious beliefs and costumes, but they have adapted and invented, like in the financial system, products or services that are in synergy with their religion and have had a lot of success.
Rajesh K. Aggarwal and Tarik Yousef, (Feb., 2000), Islamic Banks and Investment Financing, Journal of Money, Credit and Banking, Vol. 32, No. 1 pp. 93-120, Ohio State University Press Stable URL: http://www.jstor.org/stable/2601094 Accessed: 20/04/2010 18:08