Islamic Banking in Practice: the Case of Pakistan

In: Development and change, Band 26, Heft 4, S. 687-699

Abstract

ABSTRACTIn Islamic banking rules apply which differ from those in traditional banking. This article first discusses the consequences of Islamic banking for financial operations in general, then goes on to examine the Islamic procedures introduced in Pakistan's banking sector since 1985. Considering the drastic change in procedures, the effect of Islamization on this sector has been moderate. One reason for this is that banks in Pakistan have consistently opted for financial instruments closely resembling interest‐based finance. Another reason is that their behaviour has been determined to a large extent by the fact that they are state‐owned.