Islamic banking - the feasibilty of establishing an Islamic bank in the United States.

I. INTRODUCTION

This paper is written with three goals: to provide a discussion of banking practices that comply with the religion of Islam, to analyze why investment and banking interests in the United States should be concerned with Islamic banking practices, and to examine the American regulatory

In contrast to what those in the United States might consider traditional banking, Islamic banking derives its rules and practices from religious sources. (1) Having recognized this, the reader should understand that Islamic banking truly is in a developmental stage pertaining to the interaction between (1) Western financial practices which are based, in large part, on the role of interest and (2) the dictates of the Qur'an and the Islamic Prophet Mohammed, which together are interpreted to forbid interest. (2)

Written through the eyes of a "practitioner looking in" (3) at a system of banking based on Shari'a, (4) this paper attempts to identify and discuss the similarities between Islamic and Western banking practices. By focusing on the potential interrelationship between Islamic banking practices and the regulatory banking framework in the United States, the paper concludes that through innovation and regulatory flexibility, the possibility exists for establishing a Shari'a-compliant banking institution in the United States.

II. BANKING ACCORDING TO ISLAMIC PRACTICES

A. Role Of Islamic Tenets And Teaching In A Muslim's Financial Affairs

As an initial proposition, it should be understood that "religious laws in Islam govern all aspects of life." (5) In writing about Islam, Imtiaz Pervez explains:

   [Islam] is a comprehensive way of life, religious and secular; it
   is a set of beliefs and a way of worship; it is a vast and
   integrated system of laws; it is a culture and a civilization; it
   is an economic system and commercial norm; it is a polity and a
   method of governance; it is a society and a family conduct; it
   prescribes for inheritance and divorce, dress and etiquette, food