Islamic Banking and Finance (IBF): Challenges of Putting Theory into Practice, and their Implications for the Long-Term Viability of IBF
The British University in Dubai (BUiD)
Islamic banking and Finance (IBF) has been in existence for over two decades, and has seen it evolve into a formidable sector in the global financial system. However, this has not been without challenges, not least, winning acceptance in an environment where its basic concept run contrary to the established economic, social and political norms that were in existence for centuries. This study examines the effects of these challenges in shaping the theory of Islamic banking into what it is today and their implication for its long-term viability. Theory of IBF is compared to its practice today using the characteristics of its products and services, its stakeholders and other economic agents, based on theoretical deductions from already published academic materials. The result suggests that IBF is heavily influenced by economic, political and social realities, and is slowly converging to conventional banking and finance practices.