ABSTRACT
The “riba” or “interest” is prohibited in Islam. Islamic banks around the world thus conduct their financing activities without interest. The chapter aims to address “riba” and its elimination by Islamic banking finance in detail. There are different Islamic financing techniques or modes applied by Islamic banks while conducting financial transactions with customers, details of which are discussed in the chapter.
In many developing and least-developed nations, small and medium enterprises (SMEs) contribute greatly towards economic growth. However, due to the shortage of capital, they are compelled to borrow funds from local moneylenders and other privately run NGOs at a high rate of interest. Islamic banks in different nations like Bangladesh, Sudan, Türkiye, and Cyprus invest their funds in the SME sector without interest. An empirical review of Islamic bank finance in these nations is also highlighted in the discussion.
An Institutional-Network Theoretical Approach is used while studying this phenomenon. Qualitative research and a “case study” method are used while collecting data from the field.
