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Islamic banking

Islamic banking Definition

Islamic banking refers to a system of banking which is consistent with Islamic law and guided by Islamic economics. In particular, Islamic law prohibits the collection of interest, also commonly called riba in Islamic discourse. One form of the argument against interest is that money is not a good and profit should be earned on goods and services only; not on control of money itself. (Return on Assets).

While Islamic law prohibits the collection of interest it does allow a seller to resell an item at a higher price than it was bought for, as long as there are clearly two transactions.

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