Abstract

This paper aims to investigate the origins and evolution of IslamicBanking and Finance from the early days of Islam up to the formal establishmentof Islamic banks in the sixties of the last century. It also sheds light on thebanking practices in the later parts of Islamic history which is an almost unresearchedarea. It records the existence of interest free lending societies at theend of the 19th century and the situation preceding the development of modernIslamic banks in the second half of the twentieth century. The paper concludesthat Islamic banking was an attempt to practice an aspect of economic life inan Islamic way and it first emerged in rural and agricultural economies andnothing to do with the petrodollar or oil boom of the Middle East as usuallyput forward.