Principles of Islamic banking: how does it differ from traditional banking?

the presented article explores the formation and development of Islamic banking, analyzing its transformation from a niche religious phenomenon into a significant element of the global financial system. The purpose of the study is to identify the key principles underlying Islamic finance, assess their differences from traditional banking models and determine the possibilities of their practical application in the modern world. The article examines in detail the fundamental principles of Islamic banking, such as the prohibition of usury (riba), excessive risk aversion (gharar) and the promotion of socially responsible investment. Various Sharia-compliant financial instruments are analyzed, including mudaraba, murabaha and ijara, demonstrating their innovative approach to financing based on profit and loss sharing rather than interest rates. The practical application of Islamic banking goes beyond meeting the needs of the Muslim population. The unique model, which emphasizes ethics, justice and social responsibility, attracts the attention of large international companies and clients of various faiths. Islamic banks offer a wide range of services adapted to modern financial realities, including trade finance, asset management, and interest-free loans for charitable purposes. The study demonstrates how the principles of Islamic finance can contribute to creating a more sustainable and ethical global financial ecosystem.

Islamic banking, riba, usury, mudaraba, principles, investments