The causes of the late emergence of Islamic banks

Islamic banking is an integral part of the Islamic economic system which developed and grew up under the shade of the generous Islamic `Aqidah (creed), but due to many reasons, its application was not complete in the way we notice today and the great expansion which the Islamic banking system is witnessing except after a long period of time.

If we compare the age of Islamic banking to the traditional (usurious) banks, we find them still young. The oldest of these Islamic banks is fifty years which is the same age of national banks in most of the Arab and Islamic countries, whereas the age of the banking transactions in Europe more than four hundred years[1].

The reasons of the late emergence of Islamic banks go back to a variety of reasons, including:

1- Deviation and diversion from the Islamic Shari`ah and the political chaos in the successive Islamic differences.

2- The emergence of small and weak countries diverted for the Islamic central regime and the breaking out of wars among them.

3- The continued wars with the crusaders, the Mongols, and the Tatars who destroyed and ruined the Islamic countries.

4- The spread of ignorance, myth, and lack of education which led to avoidance of financing and investment operations.

5- Subjection of the majority of Muslim countries to long periods of occupation and forcing the Muslim countries to adopt the monetary and economic systems of the occupying countries.

6- The reduction of agriculture affected in a small part the way it was in the tenth century, and also the number of people decreased relatively. So, the lands were taken from their owners by the orders of military commanders, the methods of farming remained the same, and the peasants remained as such, which resulted in poor harvest and no need to indulge in financing and investment operations.

7- lack of awareness about Islamic banking at the majority of the people which led to avoid the banking operations to revive the Islamic banking system.

8- The weakness of the production activities whether an industry that needs financing by the forms of Istisna` (a kind of trade in which the person who owns money gives his money to a craftsman to put it in business) or others, or a trade that needs speculation or Murabaha (resale with profit), in addition to a complete absence of economic activities that we see today.

9- The lack of Islamic economic cadres which play that role, but only Islamic callers who handle this role.

10- The emergence of political parties, slogans, objectives, and intolerance for each of them away from the Islamic Shari`ah.

These reasons had a significant role in the absence of the activities of Islamic banking for long periods; which led to the emergence of numerous economic and social crises and problems.

The case remained as such until the sincere and serious calls came to establish Islamic banking on the basis of the Islamic economic system in the mid-sixties of the twentieth century.

Soon these banks spread until they flourished in the most prestigious Arab and Western countries as a result of its clear objectives and eternal mission.