Islamic Banking
Introduction
Islamic finance has come a far since its active re-introduction about 25 years ago. Presently, it is estimated that Islamic banks and financial institutions manage some US$200 billion of funds all over the world. Although small in terms of the total global assets managed by financial intermediaries, the growth rate is impressive by any standards. Based on the article review which is “Globalization of Islamic Finance: Myth or Reality?’” it had discussed on the question of whether the phenomenon of Islamic finance or Islamic Banking is truly globalizing, that is, spreading as a universal alternative to conventional finance and banking or whether the proponents of such a view are spreading a myth or are themselves simply deluded by their own enthusiasm. This article has also addresses the various aspects of the globalization of Islamic finance, among others, the issue of the rise of Islamic banking in the West, Islamic jurisprudence and finance, the Islamic Financial Services Industry, global standards and integration of Islamic finance, and obstacles facing Islamic finance’s integration and growth into the global financial system.
Rise of Islamic Banking
The beginnings of Modern Islamic Banking
From its beginning, Islam gave a positive approach to wealth creation, recognized private property, and emphasized fulfillment of contracts and fair dealings. It set limits to freedom of enterprise designed to protect similar freedom of other individuals and protect social interest. Prohibition of interest is one of those limits as well as prohibition of gambling, fraud and hoarding. The first Islamic financial institution created in Malaysia was the Muslim Pilgrims Savings Corporation, founded in l963 to help Muslims to save money so that they would be able to make the once-in-a- life-time pilgrimage to the holy cities of Mecca and Medina in Saudi Arabia, known as Hajj. The first modern theoretical literature on Islamic banking appeared in Urdu,
Islamic finance has come a far since its active re-introduction about 25 years ago. Presently, it is estimated that Islamic banks and financial institutions manage some US$200 billion of funds all over the world. Although small in terms of the total global assets managed by financial intermediaries, the growth rate is impressive by any standards. Based on the article review which is “Globalization of Islamic Finance: Myth or Reality?’” it had discussed on the question of whether the phenomenon of Islamic finance or Islamic Banking is truly globalizing, that is, spreading as a universal alternative to conventional finance and banking or whether the proponents of such a view are spreading a myth or are themselves simply deluded by their own enthusiasm. This article has also addresses the various aspects of the globalization of Islamic finance, among others, the issue of the rise of Islamic banking in the West, Islamic jurisprudence and finance, the Islamic Financial Services Industry, global standards and integration of Islamic finance, and obstacles facing Islamic finance’s integration and growth into the global financial system.
Rise of Islamic Banking
The beginnings of Modern Islamic Banking
From its beginning, Islam gave a positive approach to wealth creation, recognized private property, and emphasized fulfillment of contracts and fair dealings. It set limits to freedom of enterprise designed to protect similar freedom of other individuals and protect social interest. Prohibition of interest is one of those limits as well as prohibition of gambling, fraud and hoarding. The first Islamic financial institution created in Malaysia was the Muslim Pilgrims Savings Corporation, founded in l963 to help Muslims to save money so that they would be able to make the once-in-a- life-time pilgrimage to the holy cities of Mecca and Medina in Saudi Arabia, known as Hajj. The first modern theoretical literature on Islamic banking appeared in Urdu,