The Influence of Religion on the Economy in the Example of the Islamic Bank

Abstract

The influence of religion in the organization of states and the arrangement of policy has been clearly outlined over centuries. However, it's interesting that its role has especially increased regarding the economy and finances. The most obvious example of this is an Islamic bank model. The Islamic bank is no longer a new phenomenon in the world, which nowadays crosses the borders of Islamic countries.

The first attempt to create a modern Islamic bank was in Egypt in 1963. By 1967, there were already nine such non-commercial banks operating in the country. However, the first initials can still be seen from the time of Prophet Muhammad. After that, in the 70s of the 20th century, along with the change in the political background in the Middle East, essentially different financial institutions appeared one after another in the region. Their model tries to break the specifics of the Western banking system introduced at the beginning of the 20th century and is based not only on economic but also on religious laws (Hassan and Lewis 2007b).

The article reviews the concept of an Islamic bank with its religious and financial characteristics. At first glance, an impossible collaboration between the elementary principles of profit-making and Sharia laws has been proven to the world for several decades that it has successfully taken place. Its evidence is the tendency of Islamic banks to spread not only in the Middle East and the Muslim world but also in Europe and America (Noland and Pack 2007).