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2013, vol. 42, iss. 3, pp. 106-141
Islamic versus conventional banking: A comparative analysis of financial arrangements
Univeristy of Niš, Faculty of Economy
Challenges and Prospects of Structural Changes in Serbia: Strategic Directions for Economic Development and Harmonization with EU Requirements (MESTD - 179015)

The paper explores the concept of Islamic banking by making comparison between the basic features of some key conventional and Islamic financial arrangements. Paradigm version of Islamic banking forbids arrangements based on a predetermined rate of return on financial investments, instead it proposes equity based modes of finance which promote partnership between financier and an entrepreneur. Nevertheless, the theoretically suggested concepts in current practice are faced with serious difficulties (prohibitively high agency costs), and are being consequently modified. Islamic banking diverges in several important ways from the ideal version, and at the end of the spectrum closely coincides with conventional banking.
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article language: Serbian, English
document type: Original Paper
published in SCIndeks: 02/09/2013