bbc.com
Islamic Banking: Profit Without Interest
Islamic banks operate without interest, adhering to Sharia principles; they profit through profit-sharing, trade financing, or acting as intermediaries in asset purchases, a sector projected to reach $6.7 trillion by 2027.
- How do Islamic banks generate profit without charging interest?
- Islamic banks, unlike traditional ones, do not use interest. Instead, they profit from profit-sharing schemes on investments in trade and productive projects, or by acting as intermediaries in purchasing assets like houses, then selling them at a higher price.
- What are the ethical and religious principles underlying Islamic banking practices?
- The core principle behind Islamic banking is the prohibition of interest (riba), rooted in Islamic law (Sharia). This necessitates alternative financial models like profit-sharing, which aligns with the belief that money is a medium of exchange, not a source of profit in itself.
- What are the future prospects for the growth of Islamic finance, and what challenges might it face?
- Islamic finance is a rapidly growing sector, with assets projected to reach $6.7 trillion by 2027. This growth is driven by the increasing demand for ethically aligned financial services and reflects the global spread of Islamic banking practices.
Cognitive Concepts
Framing Bias
The article frames Islamic banking positively, highlighting its adherence to religious principles and its growth. While factual, this framing might unintentionally downplay potential criticisms or challenges faced by the industry. The headline itself might be considered subtly biased.
Language Bias
The article maintains a generally neutral tone. However, phrases like "l'intérêt n'est ni facturé ni payé" could be considered slightly emotive. More neutral wording such as "interest is neither charged nor paid" would enhance objectivity.
Bias by Omission
The article focuses heavily on the Islamic perspective of interest and profit, potentially omitting or downplaying alternative viewpoints on ethical finance from other religious or secular perspectives. It could benefit from including a comparison to other ethical or socially responsible investment models.
False Dichotomy
The article presents a dichotomy between traditional banking with interest and Islamic banking without it. While this is a central theme, it simplifies a more complex reality of diverse financial practices and regulations.
Gender Bias
The article mentions several experts, but doesn't explicitly detail their gender beyond referring to Celia de Anca as "Mme". This lack of specific gender information might not necessarily indicate bias, but providing more detail would enhance transparency.
Sustainable Development Goals
Islamic finance, by promoting profit-sharing and risk-sharing, aims to reduce inequality by ensuring a more equitable distribution of wealth and opportunities. The article highlights that Islamic banks invest in the real economy, potentially creating jobs and boosting economic activity in underserved communities, thus reducing income disparity.