Islamic banking and finance
An alternative form of banking which challenges the western norms and addresses it limits. But it shouldn’t really be considered a norm just because it is developed in the West, based on capitalist ideas. Other forms of banking such as IBF have been around for many years’ especially Islamic countries but just ignored by economic geographers as they were in the global South. It is not an ‘emerging’ method; it has been successful in many Middle Eastern and Asian countries wher IBF is the norm. Economic geographers fail to realise the fact that their banking theories are developed in the North and do not travel (Olds 2001). IBF vs. The mainstream
The western economy is one which is exploitative. It turns money into a commodity though charging people for borrowing (loans) in order to make money. This can be risky due to the fact that the poorest are usually the ones which will need to borrow and may not be able to pay the banks back which is what lead to the economic crisis 2007/8. Payday loan companies such as Wonga.com charge such high interest rates that borrowers often end up paying more than they borrowed in the first place. In comparison, Islamic banks see money as a real thing. This form of banking is a way that non-western economies can ‘theorise back’ Yeung 2007 to the western norms of economic geography from an Asian perspective rather than Eurocentric. Better to describe it as a diverse economy rather than alternative/emerging within a predominantly capitalist system as it draws upon different ideas, knowledge and methods. (Pollard and Samers 2007) What is Islamic banking?
It is a fairer way of lending as the teachings of Shariah law say they are not allowed to charge interest and risks are assessed more rigorously so there is less chance of people defaulting. Riba (interest) – Muslims do not believe in gaining interest as it is unfair/unjust to earn money at someone else’s expense. Gharar (risk) – this needs to be...
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