A COMPARATIVE AND CRITICAL REVIEW OF CONVENTIONAL BANKING AND ISLAMIC BANKING SYSTEM

Abstract

The modern financial system is predominantly governed by conventional banking, which is fundamentally based on interest (riba). In contrast, Islamic banking presents itself as a Shariah-compliant alternative that prohibits riba and promotes profit-and-loss sharing, asset-backed financing, and ethical investment. This research critically and comparatively examines conventional and Islamic banking systems from an Islamic studies perspective. By analyzing classical Islamic jurisprudence alongside contemporary economic discourse, the study evaluates the theoretical foundations, operational mechanisms, and socio-economic implications of both systems. The research argues that while Islamic banking offers a morally grounded and socially just framework, its practical implementation faces significant challenges that require structural and intellectual reform..

Keywords: Islamic Banking, Conventional Banking, Riba, Shariah, Islamic Economics.