The main characteristics of an Islamic financial system are described relying on recent writings on the subject and on the actual practice of Islamic banking. A theoretical model of an Islamic economic system is developed by generalizing the standard IS-LM model in order to study the effects of...

In an Islamic economic system, financial and monetary relations have to be organized and conducted in a manner which precludes the use of interest in any form. Profit and profit sharing being permitted, a wide range of contracts are available to entrepreneurs and financiers. There are other...

Islamic banks are prohibited from charging or paying interest, and thus can operate only on the basis of profit-sharing arrangements. This paper provides a brief survey of the theory and practice of Islamic banking. It covers developments in Islamic banking since the mid-1970s, how such banks...