Islamic Banking VS Conventional Banking – discover key differences, financing models, and impacts on the economy. Understanding the difference between Islamic banking and conventional banking is essential for students, professionals, and anyone interested in ethical finance. This lecture explores the core principles of Islamic banking, how it differs from conventional banking, and the wider economic impact of both systems.

Islamic banking is rooted in Shariah law, prohibiting interest (riba) and ensuring transactions are backed by tangible assets. Unlike conventional banking, where loans are interest-based and profit-driven, Islamic finance promotes fairness, risk-sharing, and socially responsible investments. Through examples such as mudarabah and musharakah, the lecture explains how Islamic banks create sustainable value while conventional systems often fuel debt expansion.

You’ll also learn:
• What is conventional banking and how it operates
• Why Islamic finance vs conventional finance leads to different outcomes for borrowers and governments
• How asset-backing in Islamic systems promotes financial stability
• The impact of both models on taxation, GDP, and long-term growth

By the end, you will clearly see the difference between Islamic and conventional banking and gain insights into why Islamic banking is increasingly recognised as a stable and ethical alternative worldwide.

Chapters:
00:00 Difference Between Islamic and Conventional Banking
00:41 Characteristics of Conventional Banking
01:06 Key Differences in Financing Approaches
01:33 Fixed Pricing vs Interest-Based Loans
01:56 Financial Stability and Asset Backing
03:08 Capital Goods and Real Asset Confirmation
03:35 Government Loans and Economic Growth
03:56 Government Borrowing Under Islamic Principles
04:21 Impact on GDP and Taxation
04:43 Profit-Sharing Models and Tax Implications

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Islamic banking offers fairness, ethics, and financial stability—explore the full lecture here: https://aims.education/study-online/difference-between-islamic-banking-and-conventional-banking-system/

For more lectures and study notes on Islamic Banking and Finance from AIMS’ Institute of Islamic Banking and Finance, please visit:
https://aims.education/islamic-banking-and-finance-notes/

This lecture is a part of educational programs offered by AIMS Education’s Institute of Islamic Banking and Finance:
https://aims.education/islamic-banking-and-finance-institute/

AIMS’ Institute of Islamic Banking and Finance offers the following internationally accredited and globally recognized programs:

Certified Islamic Banker (CIB):
https://aims.education/islamic-banking-certification-courses/

Certified Islamic Finance Expert (CIFE):
https://aims.education/islamic-finance-certification-courses/

Master Diploma in Islamic Finance (MDIF):
https://aims.education/diploma-in-islamic-banking-and-finance/

MBA in Islamic Banking and Finance:
https://aims.education/islamic-banking-and-finance-mba-masters-degree/

PhD in Islamic Banking and Finance:
https://aims.education/phd-islamic-finance-and-banking/

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