Relationship Analysis of Islamic Banking between Malaysia and Pakistan

Abstract

Islamic banking is basically a system of financial intermediation, its primary objective is to avoid receipt and payment of interest. Islam does not only prohibit dealing with interest but also with liquor, pork, gambling, pornography and any other thing which are considered haram according to Shariah. The objectives of the research is to study and describe the Islamic financing techniques used by Islamic banking institutions in Malaysia and Pakistan. For this research seven variables Promotion, Product, Preference, Knowledge, Performance, Problem and Infrastructure was taken. Qualitative technique was used to answer the research objective. The findings of research indicate that lack of awareness of Islamic banking is very high in Pakistan as compared to Malaysia. A few promotions were used by Islamic banks in Pakistan while in Malaysia customers are knowledgeable about Islamic banking because banks promote them aggressively. There is a need of government and education sector support to promote Islamic banking in both countries. The study also found that Islamic banks in Malaysia have large range of products as compared to Pakistan. The practitioners from both countries are agreed at this point that BBA, Ijarah and Murabaha are more profitable and less risky than Musharaka and Mudaraba. The Islamic banking products are almost used for same purposes in both countries while some differences are also exists. 

Keywords: Islamic Finance, Comparative Study, Malaysia, Pakistan