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CONVENTIONAL BANK VS ISLAMIC BANK (DIFFERENCES (CONVENTIONAL (The…
CONVENTIONAL BANK VS ISLAMIC BANK
SIMILARITIES
Mobilize the funds(Khaldi and Hamdouni, 2011)
Facilitate financial matters to the economy (Sinha, 2001)
Enhance the performance of the market by reducing the transaction cost
Transfer the risk and advisor of the inequality of information between parties (Morawski, 2007)
Create wealth (as part of Maqasid al-Shariah) (Ismail, 2010)
Act as an agent and for depositors that provide insurance for consumers to reduce shock that might affect their liquidity (Diamond and Dybvig, 2013)
DIFFERENCES
CONVENTIONAL
The efficiency of FI that influenced
by the contractual design
Common law
Civil law system
Socialist law system
ISLAMIC
FI are not disconnected from real economic activities
Activities that are detrimental to the society
No interest-based transaction at all
Provide asymmetric
information to the consumers
LEGAL ENVIRONMENT
POLITICAL
CONVENTIONAL
Mechanism of social order and cooperation governing the behavior of a set of individuals within a given human community
System that creates rules to omit uncertainty and risk by providing a social structure that gives people the power to control their environment
ISLAMIC
Shariah advisory as the middleman of Shariah supervision becomes the backbone of the industry
PHILOSOPHICAL
CONVENTIONAL
created based on the ideologies of secularism, liberalism and materialism
ISLAMIC
provides a distinctive outlook on the phenomena of creation, its evolution, existence and final destiny