Islamic banking in retrospect
Much of the modern Islamic banking business was set up in the 1970s, but discussions had been around much earlier, predominantly among Islamic economists. For this reason, it is not surprising to see the concern for economic justice and equity from profit-loss sharing (PLS) arrangements such as mudaraba and musharakah against the evils of riba (usury/interest) which is blamed for the economic injustices that people face. Riba is said to favour the rich class over the working class as the former holds greater command of income and assets. Small businesses and startups stand no chance to compete with big companies for bank loans. In a way, PLS can be the way out to introduce justice into the banking business. Early Muslim economists such as Mahmoud Abu Saud, Nejatullah Sidiqqi, Umar Chapra, Zubir Hasan and Abbas Mirakhor followed by the younger cadres at the Islamic development bank (IDB) have contributed tremendously to the field with much stress being placed on the Islamic economic objectives, which is obvious. The drive for economic development and stability in Muslim countries has produced significant debate on Islamic fiscal and monetary policies based on the zakat system and other redistributive instruments like waqf and sadaqah.
Rosly, S. A. (2022). Islamic banking in retrospect. https://ethis.co/blog/islamic-banking-in-retrospect/