What is Islamic banking and how does it work?
What is Islamic banking? Islamic banking or finance is a financing activity that must comply with Shariah (Islamic law). Therefore, the term may also refer to investments permitted under Shariah. How is Islamic finance different from other types of finance? Islamic finance is based on the belief that money should have no intrinsic value. Instead, it's just a way of exchanging valuable products and services. Related to this way of thinking about money is the idea that money should not be turned into money. This means that whenever possible, you should avoid participating in interest by paying or receiving interest. Another critical idea underpinning Islamic finance is that it should not harm. For this reason, Islamic banking services should not invest in alcohol, tobacco, gambling, etc. Islamic finance also encourages partnerships. This means that both benefits and risks should be shared wherever possible. This can be between two people, an individual and a company...