chapter  3
59 Pages

Major Issues of Transition in Islamic Banking

Islamic banking must be considered an integral part of a functioning Islamic economic system. The Islamic economic system is only part of an Islamic social system that possesses well identified characteristics whose existence is a prerequisite to assessing the efficiency with which its individual components functions. Above all, it is the full implementation of Islamic law in a society that establishes the criteria by which the optimality of a system claiming to be Islamic can be measured. When the society as a whole expresses its willingness to adopt and implement an Islamic banking system, it becomes necessary to internalise the relevant value system, composed of such elements as honesty in business dealings, faithfulness to contracts, and the duty of sharing with others. The implementation process requires considerable time, effort, and discipline on the part of all segments of the society, particularly when the society is accustomed to carrying out its day-to-day affairs on the basis of a value system which to a great degree cannot accommodate Islamic values. Herein lies the primary constraint on effectively implementing Islamic banking.