Negative impacts of riba banking on performance of Islamic banking

Islamic banking is now an established part of many nations’ banking system so much so it is said to be operating in a dual system alongside conventional banking. The duality of the system in particular is emphasised in Malaysia where the duality is even acknowledged by the nation’s central banking l...

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Main Authors:	Htay, Sheila Nu Nu, Abdul Aziz, Mohammed Zahid, Hamat, Musthpha
Format:	Conference or Workshop Item
Language:	English English
Published:	2011
Subjects:	HG1501 Banking
Online Access:	http://irep.iium.edu.my/26271/ http://irep.iium.edu.my/26271/1/6._The_Negative_Impacts_of_Riba_Banking_on_the_Performance_of_Islamic_Banking_in_a_Dual_Banking_System_like_Malaysia.docx http://irep.iium.edu.my/26271/2/1.The_negative_impacts_of_riba_banking_on_the_performance_of_islamic_banking_in_a_dual_banking_system_like_malaysia.pdf

id	iium-26271
recordtype	eprints
spelling	iium-262712013-07-25T06:12:58Z http://irep.iium.edu.my/26271/ Negative impacts of riba banking on performance of Islamic banking Htay, Sheila Nu Nu Abdul Aziz, Mohammed Zahid Hamat, Musthpha HG1501 Banking Islamic banking is now an established part of many nations’ banking system so much so it is said to be operating in a dual system alongside conventional banking. The duality of the system in particular is emphasised in Malaysia where the duality is even acknowledged by the nation’s central banking legislation. This duality however is not such an innocuous situation and is suspected by the researcher to be a principal reason for many of the weaknesses to be found in Islamic banking today. That Islamic banking is criticised for many deficiencies is a widespread phenomenon these days. Amongst the many criticisms of Islamic banking in a dual system includes it being a mirror image of conventional banking delivering products and services not much different from its conventional counterpart; it delivers products which are tenuous in terms of compliance with Shariah; it does not uphold the demands of Maqasid Shariah in failing to cater to financing for the poorer section of the society, and in failing to aid the wider and more equitable distribution of wealth; it is not attractive in competing for deposits with conventional banks; it assumes risks which should not be found in an interest free environment; and it manages risk as if it is a money lender. The reasons for these deficiencies have been attributed to it being too focussed on debt financing products, the weaknesses of Islamic bankers, and the impiety of the ummah. No studies have sought to identify the coexistence of conventional banking as a factor directly contributing to these weaknesses and deficiencies of Islamic banking. No studies have examined the environment Islamic banking is expected to be operating in as compared to the environment it found itself in. No studies have examined whether the regulatory measures imposed on conventional banking is correct when similarly imposed on Islamic banking. This study aims to fill that gap, to determine and if proven, to articulate that conventional banking is negatively impacting on the performance of Islamic banking, in particular on Islamic banking’s ability to uphold true compliance with Shariah. This study finds that in reality, the impacts of the riba banking on the performance of Islamic banks are negatives. It is hoped that this study will trigger similar studies to further prove its findings. It is the unashamed hope of the researcher that one day Muslim nations can bury riba banking and build on its ashes a sole and single Islamic banking system that upholds and embodies the true demands of the Quran and Sunnah. 2011-11-28 Conference or Workshop Item PeerReviewed application/pdf en http://irep.iium.edu.my/26271/1/6._The_Negative_Impacts_of_Riba_Banking_on_the_Performance_of_Islamic_Banking_in_a_Dual_Banking_System_like_Malaysia.docx application/pdf en http://irep.iium.edu.my/26271/2/1.The_negative_impacts_of_riba_banking_on_the_performance_of_islamic_banking_in_a_dual_banking_system_like_malaysia.pdf Htay, Sheila Nu Nu and Abdul Aziz, Mohammed Zahid and Hamat, Musthpha (2011) Negative impacts of riba banking on performance of Islamic banking. In: World Congress on Islamic Systems 2011 (World-ISLAM 2011), 28-29 November 2011, Ivory 9, Level 4, Convention Centre, Kuala Lumpur. (Unpublished)
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English English
topic	HG1501 Banking
spellingShingle	HG1501 Banking Htay, Sheila Nu Nu Abdul Aziz, Mohammed Zahid Hamat, Musthpha Negative impacts of riba banking on performance of Islamic banking
description	Islamic banking is now an established part of many nations’ banking system so much so it is said to be operating in a dual system alongside conventional banking. The duality of the system in particular is emphasised in Malaysia where the duality is even acknowledged by the nation’s central banking legislation. This duality however is not such an innocuous situation and is suspected by the researcher to be a principal reason for many of the weaknesses to be found in Islamic banking today. That Islamic banking is criticised for many deficiencies is a widespread phenomenon these days. Amongst the many criticisms of Islamic banking in a dual system includes it being a mirror image of conventional banking delivering products and services not much different from its conventional counterpart; it delivers products which are tenuous in terms of compliance with Shariah; it does not uphold the demands of Maqasid Shariah in failing to cater to financing for the poorer section of the society, and in failing to aid the wider and more equitable distribution of wealth; it is not attractive in competing for deposits with conventional banks; it assumes risks which should not be found in an interest free environment; and it manages risk as if it is a money lender. The reasons for these deficiencies have been attributed to it being too focussed on debt financing products, the weaknesses of Islamic bankers, and the impiety of the ummah. No studies have sought to identify the coexistence of conventional banking as a factor directly contributing to these weaknesses and deficiencies of Islamic banking. No studies have examined the environment Islamic banking is expected to be operating in as compared to the environment it found itself in. No studies have examined whether the regulatory measures imposed on conventional banking is correct when similarly imposed on Islamic banking. This study aims to fill that gap, to determine and if proven, to articulate that conventional banking is negatively impacting on the performance of Islamic banking, in particular on Islamic banking’s ability to uphold true compliance with Shariah. This study finds that in reality, the impacts of the riba banking on the performance of Islamic banks are negatives. It is hoped that this study will trigger similar studies to further prove its findings. It is the unashamed hope of the researcher that one day Muslim nations can bury riba banking and build on its ashes a sole and single Islamic banking system that upholds and embodies the true demands of the Quran and Sunnah.
format	Conference or Workshop Item
author	Htay, Sheila Nu Nu Abdul Aziz, Mohammed Zahid Hamat, Musthpha
author_facet	Htay, Sheila Nu Nu Abdul Aziz, Mohammed Zahid Hamat, Musthpha
author_sort	Htay, Sheila Nu Nu
title	Negative impacts of riba banking on performance of Islamic banking
title_short	Negative impacts of riba banking on performance of Islamic banking
title_full	Negative impacts of riba banking on performance of Islamic banking
title_fullStr	Negative impacts of riba banking on performance of Islamic banking
title_full_unstemmed	Negative impacts of riba banking on performance of Islamic banking
title_sort	negative impacts of riba banking on performance of islamic banking
publishDate	2011
url	http://irep.iium.edu.my/26271/ http://irep.iium.edu.my/26271/1/6._The_Negative_Impacts_of_Riba_Banking_on_the_Performance_of_Islamic_Banking_in_a_Dual_Banking_System_like_Malaysia.docx http://irep.iium.edu.my/26271/2/1.The_negative_impacts_of_riba_banking_on_the_performance_of_islamic_banking_in_a_dual_banking_system_like_malaysia.pdf
first_indexed	2023-09-18T20:39:10Z
last_indexed	2023-09-18T20:39:10Z
_version_	1777409248666320896

Negative impacts of riba banking on performance of Islamic banking

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