The Hundred Differences between Islamic and Conventional Banking Systems

Islamic Banking is a catchphrase now to many of the policy makers in the globe. Neither receipt nor
payment of interest in this system questions its survival. Astoundingly, it has proved itself as a more
effective system than currently practiced interest based banking system. However, the recent global
economic crisis has impacted financial performance of many banks all over the world. It has forced around
123 banks in the U.S. to file for bankruptcy in just a year, including American giant bank Lehman
Brothers that was never been expected to fail. Fascinatingly, even in such turmoil Islamic banks are found
to be relatively less affected by the crisis than their conventional peers (S E Hidayat et al, 2012).
Consequently, a lot of interest is shown by the economists across the world in assessing its feasibility in
adapting in main stream economy. In this context, an attempt is made in this paper to understand the
differences between Islamic and conventional banking systems in practices and their impact on economic
variables such as inflation, full employment, exports, business cycles etc.