Islamic Banking in Iran and Pakistan: A Comparative Study

Abstract

In recent years, several Muslim countries have made ambitious attempts to practise Islamic banking. Iran and Pakistan appear to be particularly active in transforming their banking and financial sectors completely in line with the dictates of shariah [N aqvi (1981)]. The present study aims to contribute to the understanding of the process of Islamisation of banking in these countries. This kind of understanding, it is believed, is important for policy-makers guiding the Islamisation process anywhere in the world. The study tracks, over a period of a decade, the routes Iran and Pakistan have taken to attain their avowed objective, and focusses on the common concerns they share in their respective pursuits. The study also discusses the ~iverging sets of problems faced by these countries. The limited amount of empirical research in the area of Islamic banking has left many policy-related questions unanswered. One reason for the scarcity of studies on the subject has been the lack of suitable information. However, with the availability of some patchy but useful data at hand it is now possible to arrive at some interesting conclusions in a systematic fashion.