Conventional Banking And Islamic Banking

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Recommended: Islamic Banking in comparison with Conventional Banking

3.4 Unethical behaviour
Islam places the highest importance towards ethics, and takes precautions when involving with business and transactions to ensure that they conform to high ethical standards. Sharia’s rules do not approve of publicity that leads to concealing facts, exaggeration about the product or the financial position of any entity. One of the main reasons why consumers chose Islamic banking is purely based on their strong robust ethical behaviour. Ethics in Islam include that there is justice, fair dealing, trust and honesty. Plus, prohibition of non-serious bidding (Najash) which is bidding on commodities, shares, stocks and bonds. Prohibition of misleading marketing (Khalabah) is trying to sell to consumers with information that is not necessarily true, such as the quality of a good is highly overrated , which is unfair practise .And, finally, freedom from detriment (Dharar).
4.0 Conventional Banking
Since, the background of Islamic banking and law has been defined; the background of conventional banking can now be explored. Conventional banking provides a financial service that does not have any morals or values to follow, and has no ethical concerns, instead their main purpose is to allow profit to be created, with very little restrictions. Without there being any prohibitions with conventional banking, the methods of the banking system can be examined to compare and contrast them with Islamic banking.
4.1 Interest
The first method of conventional banking that will be examined is interest. In terms of interest, it is allowed to be achieved through debtor and creditor relationships, unlike Islamic banking. Creditors are able to lend a loan to borrowers whom are in need, and the decision for the creditor to lend ...

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... and contrasts with the traditional method of conventional banking. In conclusion, the three objectives of this research proposal have been answered with the best attempt and closest to most accurate results. The theory discussed about conventional banking and Islamic banking suggests that the two banking systems are so different that they cannot be compared. On the contrary, empirical evidence suggests that they might be more similar than discussed, as there is little significance between the two. I believe that in the future Islamic banking will continue to prosper, allowing consumers to be more aware that they have the choice of which banking system they would like to use. Also, it might be possible that we will see that the methods of conventional banking become more ethical to their consumers rather than just acting as large profit consuming organisations.

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