Thirty Years of Islamic Banking

Munawar Iqbal is Chief of Research in Islamic Banking and Finance at the Islamic Development Bank, Jeddah, the largest Islamic financial institution in the world. He has served as Economic Adviser to the Al-Rajhi Banking and Investment Corporation, Saudi Arabia, the largest Islamic commercial bank in the world. He has also served as Director at the International Institute of Islamic Economics at the Islamic University in Islamabad, Pakistan. He has taught there and at McMaster and Simon Fraser Universities in Canada and has published and edited many books and papers in the area of Islamic Banking. Philip Molyneux is Professor in Banking and Finance, and Director of the Institute of European Finance at the University of Wales, Bangor, UK. He also has a chair at Erasmus University, Rotterdam, The Netherlands. His main area of research is on the economics of the banking and financial services industry and he has published widely on the subject of banking and finance. Professor Molyneux has recently been appointed as one of eight expert financial sector advisers to the European Unions Economic and Monetary Affairs Committee that implements financial services regulations for the European Community.

• List of Tables and Boxes Preface Glossary of Arabic Terms List of Abbreviations PART 1 : INTRODUCTION PART 2: THEORETICAL FOUNDATIONS OF ISLAMIC BANKING Why Islamic Banking: The Rationale Principles of Islamic Banking: The Basis Conclusion PART 3: DEVELOPMENT OF THE ISLAMIC BANKING MODEL What is Islamic Banking: The Model How is Islamic Banking Different from Conventional Banking: The Salient Features What does The Islamic Banking Model Promise? Conclusion PART 4: HISTORY AND GROWTH OF ISLAMIC BANKING AND FINANCE How Islamic Banking Started Various Manifestations of the Islamic Financial Industry Country Experiences with Islamic Banking Islamic Banks and Financial Institutions Working in Mixed Environments Islamic Banking Practices by Conventional Banks International Islamic Financial Institutions Other Institutions Conclusion PART 5: THE PERFORMANCE OF ISLAMIC BANKS Soundness Prudence Effectiveness Economy Profitability Islamic and Conventional Banks: A Comparative Analysis Conclusion PART 6: EFFICIENCY IN ISLAMIC BANKING Why Study Islamic Bank Efficiency? Measuring Bank Efficiency Empricial Evidence on Efficiency in Islamic Banking Conclusion PART 7: CHALLENGES FACING ISLAMIC BANKING Theoretical Challenges: Unresolved Issues Practical Challenges: Operational Problems Conclusion PART 8: ISLAMIC BANKING IN THE TWENTY-FIRST CENTURY Where Islamic Banking Needs To Go: The Way Ahead Conclusion PART 9: SOME AREAS FOR FURTHER RESEARCH IN ISLAMIC BANKING AND FINANCE Asymmetric Information Moral Hazard Problems Adverse Selection Problems Principal Agent Problems and the Need for Monitoring Implications of the Sharing Features of PLS Contracts The Need for Further Empirical Investigations Conclusion PART 10: SUMMARY AND CONCLUSIONS Bibliography Index Notes