Islamic Banking vs Conventional Banking: Key Differences

The banking industry offers two distinct approaches: conventional banking based on interest, and Islamic banking based on Sharia principles. Understanding these differences is crucial for making informed financial decisions.

Fundamental Principles

Conventional Banking

Islamic Banking

Core Differences

1. Interest (Riba)

2. Risk Management

3. Asset Backing

4. Investment Restrictions

Product Comparisons

Home Financing

Conventional Mortgage:

Islamic Home Financing (Murabaha/Ijarah):

Business Financing

Conventional Business Loan:

Islamic Business Financing (Mudarabah/Musharakah):

Savings Accounts

Conventional Savings:

Islamic Savings (Investment Accounts):

Regulatory Framework

Conventional Banking

Islamic Banking

Global Market Share

Conventional Banking:

Islamic Banking:

Advantages and Disadvantages

Conventional Banking

Advantages:

Disadvantages:

Islamic Banking

Advantages:

Disadvantages:

Choosing Between Systems

Consider these factors:

Future Outlook

Both systems continue to evolve:

The choice between Islamic and conventional banking ultimately depends on individual preferences, religious beliefs, and financial goals. Both systems serve important roles in the global financial ecosystem.