Islamic Banking and Economic Development

34 Pages Posted: 29 May 2010

Date Written: September 1, 2009


This paper theoretically investigates the effectiveness of Islamic banking & finance concepts and concludes that in addition to the traditional prohibitions, Islamic banks should be aware of the immoral defrauding and selfish sales behaviour that took place in Western financial institutions, which only protected banks’ interests and the bonuses paid to management. In addition and through discussing developed countries banking practices in the 19th century, it has been concluded that the Islamic PLS (profit and loss sharing) contracts would have helped accelerate economic growth by its force of directing funds into profitable industries that increases banks’ cash flows and market confidence.

Keywords: Credit Crunch, Banks, Economic Development, Islamic Finance, Business Ethics

JEL Classification: A11, B31, D24, D63, G21, M13, O12, P51

Suggested Citation

Dahduli, Mahmoud S., Islamic Banking and Economic Development (September 1, 2009). Available at SSRN: or

Mahmoud S. Dahduli (Contact Author)

Bangor Business School ( email )

Bangor Business School
College Road
Gwynedd LL57 2DG, Wales LL57 2DG
United Kingdom
+447817899451 (Phone)

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