Islamic Banking

Islamic banking is a financial system founded on the principles of Sharia Islamic law , with emphasis on ethical conduct, social justice, and the linkage of finance to real economic activity. Islamic banking unlike the conventional banking prohibits the payment or receipt of interest riba , excessive uncertainty gharar , and speculative activities maisir , while promoting profit and loss sharing cum asset backed transactions. Its core financing mechanisms such as Murabaha cost plus sale , Mudarabah profit sharing partnership , Musharakah joint venture , and Ijarah leasing enable Islamic banks to provide financial services that are both commercially viable and compliant with religious principles. In order to maintain compliance, governance is ensured through Sharia supervisory boards, which oversee product design and operations. Regardless of the challenges related to standardization, liquidity management, and regulatory harmonization, Islamic banking has continued to expand across both Muslim majority and non Muslim countries, offering an alternative model of finance that integrates economic efficiency with moral and social responsibility. This paper attempts to holistically look at the challenges facing Islamic banking, solutions to them, and its benefits to humanity. Paul A. Adekunte | Matthew N. O. Sadiku | Janet O. Sadiku "Islamic Banking" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-10 | Issue-1 , February 2026, URL: https://www.ijtsrd.com/papers/ijtsrd100154.pdf Paper URL: https://www.ijtsrd.com/other-scientific-research-area/other/100154/islamic-banking/paul-a-adekunte