CONSUMER PREFERENCES WHILE CHOOSING ISLAMIC OR CONVENTIONAL BANKING

Abstract

When we hear the woid Bank , there are certain words which come in our mind for example: funds, returns, deposits etc. But, if we think from the perspective of our religion “ISLAM”, we will be in a better position to think behind this term “BANK”. Majority banking systems are based on Interest, which is without any doubts “HARAM” in Islam. Islamic banks follow Sharia’h principles while conventional banks follow manmade principles Nowadays, we can observe that especially Islamic countries are now working on ways in order to avoid interest based banking system in their countries. No one can ignore the importance of Islamic Banking but the important thing is whether it is being implemented purely on the concepts of ISLAM or not. Different people have different opinion on this aspect, but my observation is according to the old British Navy Quote “Choose the less between two evils” No matter which system you are trying to apply or practice in your country, the success of that system purely depends upon whether the people living in the country have information regarding it or they have knowledge about it. This term paper discusses and throws a light on some very important aspects of the Banking industry in terms of the consumer preference while choosing any system and to highlight whether Islamic and Conventional Bank are equal in terms of risk and return or not. Also this paper will briefly describe Islamic Banking and differentiation between Islamic and Conventional Banking.