The Performance Of Islamic Banks Essay

Islamic window is a concept introduced by Malaysian central (Bank Negara) bank where conventional banks also offer Islamic products beside conventional products in same environment by same staff. Initially, Islamic bank facing fierce competition from long establish conventional banking system. Islamic window introduction can reduce this since Islamic products also became a source of profit for conventional banks. A few conventional banks offering Islamic banking service under Islamic window has achieved an important volume of transactions in the Islamic window that they even set up Islamic bank subsidiary full fledge.

Becoming an expert in Islamic economics and finance field is one of my long-term goals in life. I started to organize and made a plan towards achieving that dream since senior high school. The concern towards Islamic economics and finance concept, and its application for society and the country began when I was reading a book entitled Islamic banking-theory and practice. After finishing reading the book, my interest in Islamic economic and finance topics rose and strengthen my own determination to become the expert of Islamic economics and finance. The main principle of Islamic economics and finance which offers the just and ethics in economic activity, poverty alleviation through income distribution mechanism, and prevention of economic and

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.

Islamic banking is the banking that is guided by Islamic law (Shariah) principles and guided by Islamic economics. Islamic law forbids the usury, the collection and payment of interest which commonly called as Riba in Islamic term. Islamic banking finds its roots in Islamic finance and all type of transactions are interest is prohibited in Islamic ways of banking as it is also obvious from Quran.

Islamic Banking is quite similar to a conventional bank. Only here the essential feature is that it is Interest Free i.e. it purely follows the Islamic law – Sharia’h (Rules) and guided by the Islamic Economics that forbids the both the payment and the receipt of Riba (Interest). The two main principles are basically Banks will share the Profit & Loss (enabling risk sharing) and disallow Interest in any form.

Awaqf, the Arabic Pronunciation of the word endowment, has become a vital element of the economic sector of Sharia law as well as the Amana bank. “This asset, be it in real estate, inheritance, or savings in benefits, is something that will help someone in society,” which is one of the basic principle of Amana bank. This is a vital sector of the industry that the bank is especially wonder, careful with when it comes to its dealings with their

'' Islamic banking '' is interest free asset backed banking governed by the principles of Islamic shariah.

According to ( Umar Chapra, 2003) limited entréé to finance by the poor entrepreneurs brings about lack of broad-based ownership of businesses and industries which in turns, hinders realisation of egalitarian society. This phenomenon is rampant is Muslims countries, thus requires attention from Islamic institution compulsory savings or micro-takaful.

Shahjanaz Kamaruddin begins this article by stating that Malaysia has developed into becoming a full-fledged Islamic financial system operating in parallel to its conventional counterpart. Islamic finance is based on the Islamic principle of Syariah which is relevant in today’s world. According to the Islamic Finance Development (IFD) Report 2014, Malaysia is the undisputed in sukuk(bond) with a 63% of global market share. Malaysia performs very well across 5 indicators which are quantitative development, knowledge, governance, CSR (corporate social responsibility) and

Several research studies have done not only about the importance of performance evaluation (financial and non financial) of banks but also for the impact of analysis to the economy and various stakeholder groups. Generally the financial performance of banks and other financial institutions has been measured using a combination of financial ratio analysis, measuring performance against budget, benchmarking or a mix of methodologies Avkiran, (1995). Bank performance evaluation is of great importance for individuals because of their needs to safe against banking with a risk-running bank or due to the speculative motives linked to the activities on the capital market Hunjak, (2001). Competition in the banking sector forces banks to use their resources effectively and performance evaluation of commercial bank have an important role in service sector Ertugrul and Karakasaoglu, (2009). According to Jeon and Miller, (2006) bank performance is described in terms of bank profitability and productivity in banking. Furthermore, Melvin and Hirt, (2005) explained that performance may also refer to the development of share price, profitability or the present valuation of a company. According to Brigham and Ehrhardt, (2005) bank performance represents balance between profitability and liquidity of bank in banking field. While profitability is usually

Interest, also known as Riba in the Quran is strictly prohibited in Islamic banking. It is the key difference between Islamic banking and conventional banking. In Islamic banking interest is defined

It is undeniable fact that Islamic banking system has been flourishing for last few decades and now has become the focus of global market forces. Pioneers of Islamic banking proclaim that foundational principles of Islamic banking is allied with Shari’ah guidance and their accounting practices, policies and financial reporting mechanism is based on Sharai’ah values. Consequently, Islamic institutions have the responsibility to follow Islamic rulings in all their practices. The core purpose of this study is to confirm that either current practices are align with Islamic ethical values or just based on shari’ah terminologies. However, author find that current practice of Modarbah are not just contrary to its theoretical foundation of Islamic Banking but also to basic shari’ah guidance to some extent. It has been also identified that whenever an issue arises in Islamic banks they try to make it shari’ah compliant instead of resolving particular issue they are busy in just manipulating or islamizing conventional banking products by using Shari’ah terminologies to capture the attention of Muslims who are thirsty for transparent ideal Islamic system. This behavior of Islamic banks has made the practices of Islamic banks more controversial. Proper implication of current study can make great contribution in the literature of Islamic banking as it will help Islamic banks to review their practices in order to fulfill the basic ethical principles of Islam.

This paper investigates the efficiency of public and private sector banks in Peshawar. For this purpose, we have taken the secondary data from income statement, balance sheet and other financial reports of banks for the year for the year 2010, 2011 and 2012.We have used ratio analysis technique on financial statements of the two banks to find out the efficiency that which sector banks is more efficient. Both banks are considered very big and important financial institution for providing services to government employee and general publics. The all ratios result reveals that ABL is more efficient than the NBP and on the basis of these findings it accepts the hypothesis that “The private sector banks are more efficient than public sector banks in Peshawar” and reject the hypothesis “The public sector banks are more efficient than private sector banks in Peshawar”. we realize in this study that the private sector banks in Peshawar have better management and control over it as compare to public sectors bank. we suggest that Investors should invest in private sector banks rather t public sector banks in Peshawar and Recommended some good suggestions for the betterment of Public sectors banks.

the establishment of Islamic banking in Bangladesh. Later In November 1982, a entrustment of IDB triped Bangladesh and proclaimed enthusiastic interest to contribute or the establishing a Islamic bank through joint venture especially in the private domain. Two proficient bodies such as the Islamic Economics Research Bureau (IERB) and the Bangladesh Islamic Bankers ' Association (BIBA) ended noteworthy groundwork on the way to initiate a Islamic banking in Bangladesh. They gave several training and workshop on the law and the regulation as well as the processing of Islamic banking to different top level bank officers, economist, and scholars. Mean the time different seminars, roundtable meeting, dialouge , cros talk and symposiam as well as the workshops on Islamic banking ccross the country.

Co-operative banks generally provide their members with a wide range of banking and financial services (loans, deposits, fee based services etc). Banking system and