The missing links between Islamic development objectives and the current practice of Islamic banking the experience of the Sudanese Islamic banks SIBs

• Published in: Humanomics Vol. 22; no. 2; pp. 55 - 66
• Format: Journal Article
• Language: English
• Published: Emerald Group Publishing Limited 01.04.2006
• Subjects: Banking; Development; Islam; Social progress
• ISSN: 0828-8666
• DOI: 10.1108/08288660610669365

Purpose To vindicate whether or not there are signs of social and developmental role in the current practice of Islamic banking in Sudan, a criterion required by the rules guiding the Islamic circulation of money and investment. Designmethodologyapproach The objective of the paper is to draw attention to this important, but neglected aspect of Islamic finance, by assessing some indicators of Islamic banking in Sudan such as the geographical distribution of Islamic banks ISBs, short vs longterm investment, credit by modes of financing used, sectoral distribution of financing, role in poverty alleviation, harmonization of the Shariaa rules with economic thinking to cope with today's modern and global world development constraints, and the developmental role of ISBs within globalization. Findings Many banking indicators in Sudan are signs of the weak size of the financial sector and financial liquidity, low confidence in the banking system, and low and poor credit performance. Banks are also characterized by untidevelopmental signs of regional inequality of distribution of branches, use of sales modes uneven, shortterm and modernsectorbiased distribution of investment, high share of demand deposits and shortages of longterm funds. Practical implications The developmental role of ISBs needs to entwine economic development with social development by gearing production priorities towards common needs, via specialized branches, partnership modes, short and long term investment plans. It also requires the renewal of fiqh in the course of Ijtihad to devise new rules, or to change rules in accordance with globalization, and harmonization of economic and fiqh thinking. Originalityvalue The analysis here is valuable in drawing attention to Islamic banking practitioners that the link between Islamic finance and development objectives including social development is still under trial, and some work needs to be undertaken despite the many years which have elapsed since the introduction of Islamic finance.