Islamic Finance For Dummies

Chapter 8

Charting the Relationship between Conventional and Islamic Banks

In This Chapter

Interacting across the aisle as an individual bank

Participating in the global financial industry

Tracing the relationship between Islamic banks and regulatory banks

Islamic banking has become an important sector in the world’s financial industry. More than 300 Islamic banks are operating globally. In the past, Islamic banking was considered a niche market, but as I demonstrate in Chapter 4, it has grown to become the major market in many countries.

As I discuss in Chapter 7, some key differences exist between conventional and Islamic commercial banking (as well as many similarities). Despite these differences, the two systems have to work with each other in nations and regions where they coexist. And because Islamic banks are already operating in more than 50 nations, the systems coexist pretty frequently.

As I explain in the later section “Seeing how Islamic banks fit into national banking systems,” some countries (such as Pakistan, Malaysia, and Bahrain) have a dual financial system, meaning ...