Journal of Islamic Banking and Finance

149-162Islamic Banking System: Partnership in Sharing Business Risk
Dr. Nisar Ahmad

Abstract
Purpose: The main purpose of this paper is to review and analyze the reasons why Muslims are now shifting from conventional banking systems to Islamic banking systems. The study in fact makes an attempt to clear some of the doubts and confusions in the minds of the Muslims who still believe that Islamic banking system is not free from interest (riba) as well. Design/Methodology: The methodology and design adopted in this study is basically analytical and its material is largely taken from the research papers written in this field. However, the study makes frequent use of secondary data to support logical conclusions arrived at in this study. Contribution: The study is helpful in creating greater confidence of the Muslims in using Islamic banking system as the first best solution in accordance with the principles laid down in Islamic Shari’ah. Conclusion: The author is fully convinced that the Islamic banking system offers greater security and entails lower failure risk while facing financial crises during different phases of business cycle.

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