Islamic finance Research Paper Example | Topics and Well Written Essays - 2500 words

Islamic finance - Research Paper Example The tradesmen in the Middle Eastern region of the globe were the main facilitators of Islamic financing processes following the principle of Sharia as described in Islam. These principles were similar to those followed by the European financial transactions at that time. The Arab people belonging to the Ottoman Empire engaged in increased trading activities with the Spanish people and were the forerunners in establishing a financial system which was based on a profit and loss sharing principle and removed the system of interest payment. These principles were followed in the financing of trade processes as well as for other enterprises. With time, the Asian and Middle Eastern regions emerged as important partners in trade for the European companies like the Dutch East India Company. Therefore, the European banks started to set up their operations in these regions. These banks followed the interest based principle. At that time, the conventional financial system was considered as more important due to the role of the financial systems flowed in the Western countries from the global economic perspective. The Islamic financing systems existed in small geographic regions and their activities were limited. It is indicated by the researchers that the first trends of Islamic banking were noticed in the way the Islamic institutions conducted the transactions and payment procedures related to trade in the medieval times. But the first noticeable Islamic finance process was established in Egypt during the 1960s. The movement related to Islamic finance accelerated in the 1970s wh3wen the Arab countries saw a boom in their oil capacity and the Islamic institutions renewed and modified their interest payment and other financial systems to adhere to the Islamic laws and principles. The high growth of the predominant Islamic countries in the Middle East contributed to the accelerated diversification and expansion in the Islamic finance and banking systems. The Mit Ghamr Saving s