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  • Essay / Islamic Banking Case Study - 597

    3.0 Islamic BankingNow that Islamic law has been defined and explained in detail, Islamic banking can be observed in more detail. There are four rules that govern investment behavior in Islamic banking (Suleiman 2001):1. Interest (Riba)2. Deception/Uncertainty (Garar) and Change/Speculation (Maiser)3. Commerce (Haram)4. Support the Islamic tax system (Zakat). Along with these four rules, unethical behavior must also be considered. Next, I will discuss each of these four/five compliances of Islamic banking. 3.1 Interest (Riba) Interest, also known as Riba in the Quran, is strictly prohibited in Islamic banking. This is the main difference between Islamic banking and conventional banking. In Islamic banking, interest is defined as an increase or exploited gain, which cannot be justified. Creditors are not allowed to take advantage of borrowers if it is necessary to lend a loan. It is therefore prohibited to add interest to the existing borrowed amount. Alongside Islamic law, Christianity and Judaism also state that interest (Riba) must be condemned, because it comes out of the bo...