A Brief Review of Growth and Development in Islamic Banking

Abstract

The major purpose of this article is to illustrate the rapid expansion of Islamic banking and finance in today's financial world. It tracks the performance of Islamic banking in more than 25 countries using various indicators and indexes from across the world. Muslims have been able to build a system without interest for mobilizing resources to finance economic activity and consumer demands for a very long period in Islamic history. During the height of Islamic culture and for centuries later, the system functioned admirably. As is well known, throughout the twelfth and thirteenth centuries, partnership and profit-sharing, established the foundation of business and industry in the Mediterranean region rather than interest-based borrowing and lending. However, when the world's economic center migrated to the West over the ages, western banks and financial institutions began to dominate, while the Islamic heritage remained dormant. The Muslim world accounts for almost 24.1 percent of the world's population (over 1.8 billion people). Islamic banking could be able to reach the bulk of global customers. Due to Muslims' desire to prevent war, there has been a significant resurgence of interest in creating a new version of the ancient Islamic banking system in recent years. As a result, there is a true surge and expansion in Islamic finance and business across the world. It has grown fast in the Middle East and South East Asia. These Islamic centers have acted as a springboard for the promotion of Islamic banking in Western business and financial markets. The findings of the paper hold the Islamic banking sector has made substantial progress in becoming a truly competitive and profitable global alternative to the traditional banking system.