Essay The Extreme Joy and Expense of Having a Baby

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Islamic banking is a structure that allows conducting banking activities and trades in line with the Islamic Shari’ah laws and principles by avoiding all the haram (prohibited) activity such as interest and financing prohibited businesses.
An Islamic financial institution such as financial banking has been established before two or three decades ago in the aim to provide satisfactory financial facilities to the interested parties as compared to conventional banks. In 1974 Dubai Islamic bank which is the first Islamic commercial bank was established and later Islamic Development Bank (IDB) has been established in 1975 (Hennie and Iqbal, 2008).
Hennie and Iqbal (2008) stated in their risk analysis for Islamic banks book that Islamic …show more content…

According to Mousavi, Seyed M. Mahdi and Mahdavi Agha (2008) credit risk in Islamic banks appears in the settlement risk support. This kind of credit risk arises when the Islamic bank pays money or delivers assets before receiving its own assets or cash and then exposing itself to potential loss. Also Islamic banks expose themselves to credit risk when the bank uses profit-sharing mechanisms of financing such as Mudarabah and Musharakah because the entrepreneurs will not pay bank shares when it is due.
Although there are number of conventional banks that offer shari’ah-compliant products in their banking services, there are two major shari’ah compliant banks registered in Kenya which all of them are under the supervision of Kenya’s central bank (KCB) and they are given the same treatment as the other conventional banks in Kenya. These are Community Bank Limited, and Gulf African Bank. According to Azizul (1999) most Islamic banks that are working under the contemporary world operate in a mixed environment in which conventional banks function side by side with the Islamic banks and there are only few instances where special Islamic banking legislation was approved to define a new relationship between Islamic banks and the central bank. Ndungu (2010) noted that the concept of Islamic Finance has generated a lot of interest and overwhelming

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