CERIA Brief No. 16, March 2016
By Sebastien Peyrouse
As major Western powers have become less generous in international assistance programs since the 2000s, Islamic finance has managed to gain both visibility and respectability in the midst of a full economic and financial crisis. It offers banking services in accordance with Sharia principles, which ban transactions that have recourse to interest (ribâ), to speculation (gharar), or to chance (maysir). A banking service is termed ‘Islamic’ when: 1) it proscribes loaning on interest; 2) it makes no investments in sectors considered illegal (gaming, tobacco, alcohol, etc.); and 3) it closely ties in the social responsibil- ity of the investor. The Islamic bank is not conceived as a supplier of funds, but as a partner of the entrepreneur since it applies a principle of sharing risk with its client.