Sources of finance for Islamic Banks

Abstract
Financial institutions operate as financial intermediaries conventionally borrowing funds on the liability side of the balance sheet and lending funds on the asset side. In both cases ‘interest‘ plays a pivotal role in the exercise. The raison d’etre of Islamic banking is derived from the Islamic injunction against riba (interest). Islam prohibits interest on deposits/loans regardless of their nature or purpose. This case examines how, given that riba instruments are forbidden, Islamic financial institutions can operate as financial intermediaries.
This case study can be purchased from the author at a cost of $30 plus p&p. Note that they are designed to raise awareness of specific issues in Islamic finance. The cases come with case questions and it is expected that the instructor provides the solutions.
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