History of Islamic Banking and Finance

Abstract

This paper aims to investigate the origins and evolution of Islamic
Banking and Finance from the early days of Islam up to the formal establishment
of Islamic banks in the sixties of the last century. It also sheds light on the
banking practices in the later parts of Islamic history which is an almost unresearched
area. It records the existence of interest free lending societies at the
end of the 19th century and the situation preceding the development of modern
Islamic banks in the second half of the twentieth century. The paper concludes
that Islamic banking was an attempt to practice an aspect of economic life in
an Islamic way and it first emerged in rural and agricultural economies and
nothing to do with the petrodollar or oil boom of the Middle East as usually
put forward.