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Submitted by Vafa on
the key incredient of islamic banking is risk sharing and not only the prohibition of interest or "ribah". thus if financial products include this feature, no party is willing to accept irrational (often raher absurd) risks. certainly, in many countries islamic banking isn't implemented as it should be according to shari'a. for a very good summary of this issue see: Khan,F.,How‘Islamic’ is Islamic Banking?J.Econ.Behav.Organ.(2010) one should also bear in mind that other world religions, e.g. christianity, also used to prohibit interest payments -which usually lead to usury- and shared the fear that conventional financial products will eliminate ethics in banking. therefore, in my opinion islamic banking should be rather named moral banking as its ideas are based on ethic and all people can benefit from it. hopefully kunt et al. will soon contribute more good papers dealing with this topic. best regards from the persian gulf vafa