1. Introduction
The first official experiment with Islamic Banking in the modern era can be traced back to 1963 in the form of Mit Ghamr Bank in Egypt. From that time to the present decade,Islamic Banking has experienced phenomenal growth both in terms of size and thenumber of players in the market. Islamic Banking is currently being practiced in morethan 50 countries. This includes Muslim countries like Malaysia, Pakistan, Saudi Arabia,U.A.E, Iran, Egypt, Bangladesh and Jordan etc as well as Non-Muslim countries likeU.K, U.S.A, Luxembourg, Australia, France and Italy etc. In almost all the countries,Islamic Banking is being practiced along with the traditional banking with the exceptionof Iran where only Islamic Banking is allowed. Recent figures show that Islamic Banksare managing assets worth more than $260 billion according to 2006 figures and iscurrently growing at around 20%, which is twice more than the growth of conventional banking. This rapid growth of Islamic Banking shows that it is being accepted widely allover the world, which is due to a number of reasons.The potential of Islamic Banking can be recognized from the fact that the banking giantsin all parts of the world have also started their Islamic Banking operations andcollectively the total assets being managed under Islamic financial services are reportedlyexceeding $500 billion, of which almost half the amount is being managed byconventional banks.The objective of this study is to see the evolution of Islamic Banking in differentcountries including both Muslim and Non-Muslim countries, their current progress andtheir future prospects regarding Islamic Banking. The countries that have been chosen for this study are Pakistan, Malaysia, Turkey, Iran, U.S.A, U.K, Indonesia and the GCC etc.In the last part, along with the major differences between the two banking systems, theimportant characteristics of the Islamic Banking System have been highlighted whichhave enabled it to become an attractive banking system and have helped it achieve the phenomenal growth rate.1
2. Research Methodology2.1 The Purpose of the Study
The purpose of this study is to show the reasons, which have been the backbone of therecent success of Islamic Banking over conventional banking operations. For this purpose, Islamic Banking Industry growth in different parts of the world had to beanalyzed and so explorative study was a better option as the analysis had to be done onthe data already available on the Internet and the books written on Islamic Banking.
2.2 Data Collection
For the purpose of Data Collection, the following secondary sources have been used;
2.2.3 Articles on Islamic Banking
For the purpose of analysis of the undertaken study, articles written by differentrenowned scholars have been analyzed. These include Muslim as well as Non-Muslimscholars. Most of the articles have been gathered through the Internet and some of themhave been gathered for the Central Library of International Islamic University,Islamabad.
2.2.4 Books on Islamic Banking
Various books have been studied in order to complete the analysis. Books from local aswell as foreign authors have been analyzed. The books were obtained from CentralLibrary of the International Islamic University Islamabad and the Library of NUSTInstitute of Management Sciences. Some of the books were also accessed through theInternet.
2.2.4 Research papers on Islamic Banking
In order to complement the findings of the study, help was also taken from the research papers written by different learned scholars. These papers were gathered mainly from theInternet as well as from the Central Library of the International Islamic University,Islamabad.2
2.3 Limitations
There are certain limitations, which may have affected the results of the study;
Firstly, this study has been completed in a limited time frame.
Secondly the data, available both from the books and the Internet, was not up-to-date in quite a few cases.
Finally, the data available on Islamic Banking has mainly been obtained onlyfrom the following three sources;
o
Central Library of International Islamic University, Islamabad.
o
Library of NUST Institute of Management Sciences, Rawalpindi.
o
Internet.3
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