Can sombody explain Islamic Banking to me?

How does Islamic Banking differ from traditional banking methods? How can an Islamic Bank be profitable? Do we have any banks in the United States that offer Islamic Banking?

Answer:
Islamic banking run in line with the Islam believe. "riba" or interest is forbidden in Islam. At the outset, the most important departure of Islamic banking from conventional banking is the prohibition of Riba, and promoting Profit and Loss Sharing (PLS) as an alternative to Riba. in old days, some Muslims (includes my grandparent) only save money in bank and donate the interest.

beside that, the Islamic banking (ideally) do not involve in the forbidden business such as alcoholic beverage industry. this promise will satisfy the Muslim community to make sure that they have 'clean' money. news reported that in Malaysia Islamic banking also gain interest among non-Muslim as well.

I'm not sure about US, but almost all Malaysian bank have the Islamic banking associated with the other commercial banking.

for better explanation, check out this page:

http://www.globalpro.com.my/islamic_bank...

http://www.islamic-world.net/islamic-sta...
ok from what I remember from my economics class in islamic banking they do not charge interest because its against islamic principals to profit from helping someone. I think that they profit by having additional upfront charges based on the amount of money.

Thats the general idea from what I remember from my class. Hope it helps
To elaborate a little on the previous answer, the Koran forbids paying interest. During the middle ages, the Catholic church also prohibited paying interest. However, earning profit on an investment is OK. Thus Islamic banking is based on disguising interest payments as profits.
The Old Testament prohibits one from charging his fellow man interest. Islam adopted this rule either in the Koran, or in some other Islamic teachings. So Islamic banking is kind of an oxymoron, because banks earn money by charging interest. So "Islamic Banking" must be either (a) a non-profit bank, or (b) a bank that does issue loans.

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