Ethical Banking and Islamic Banking: A Comparison of Triodos Bank and Islami Bank Bangladesh Limited

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    Ethical finance and Islamic finance are the two important topics in the post global financial crisis market environment and in the context of sustainable development goals and circular economy. If Islamic finance is inherently ethical finance, then what remains the difference between the two is an interesting theme for investigation. Islamic finance is governed by universal and divine legal and moral principles and standards related to economic transactions. Contemporary Islamic financial practices are however, strongly criticized for giving precedence to legal forms over ethical substance and for the rising gap between moral ideals and practical realities. Ethical finance is a conscious human effort to reform finance and it embraces environmentally, socially and morally conscious practices. In this paper we select two banks, namely Islami Bank Bangladesh Limited (IBBL) and Triodos Bank. We perceive that the first is an ideal Islamic Bank and the second is an ideal Ethical Bank. We undertake an analysis of the content of balance sheet disclosures of the two banks and try to gauge the similarities and divergences in their business principles and practices. The analysis uncovers that the current practices of IBBL may far exceed other Islamic banks in terms of financial inclusion, microfinance, gender balance, SME financing and green banking while still being financially stable and profitable. However, Triodos Bank has some significant lead over IBBL regarding ethical practices since it only promotes sustainable businesses. If Triodos Bank exceeds IBBL in ethical expectations as we conclude, then it is far ahead of other Islamic banks in such comparison. The implication of our conclusion is that Islamic banking needs ethical reform and this can be benchmarked with Triodos Bank’s business model. For Islamic banks the correct approach would be to strike the right balance between ethics, moral standards, Sharī‘ah compliance and profitability. The Islamic banking model has in-built features to ensure Sharī‘ah compliance, and this can be enhanced through adopting sound ethical practices as well as dedicating efforts towards being environmentfriendly. The paper attempted to present some considerations which if present in Islamic banks would take them away from the criticism of being only forprofit in motivation. Triodos has balanced its for-profit and not-for-profit motivations letting the later to lead the first.

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    8 replies

      This is another caracteristic of the extremist Muslim.
      Islamic Bank—-Halal internet—- halal gricerY—- halal food—halal restsurant—- halal Hotel ect.

      They want to discriminate against non Islam in all day-activities. The extremist Muslim’s act are wrong, against the true Islamic teaching. Mislead Muslim.

      All ❤
      Progressive Muslim want to correct the false interpretation of Islamy by extremist clerics

      • many non-Muslims deposit funds in Islamic banks because Islamic banks follow ethical banking and therefore are safer. But, yes, as all Banks, whether Islamic or not, work inside the same economic system I have some doubts about how ‘Islamic’ Islamic banks really are. Halal Groceries, Halal Restaurants etc. Can you please stop wining about it? No body forces you to go there. Regarding foods I like the variety on offer. And, yes, I do not want my shrimps fried in pork fat.

    2. Islamic Bank is Haram, why? Discrimination!
      Because all employee have to be Muslim, women employee have to wear hijab.
      It means non Islam do not be allowed to become employee.
      This act is discrimination, rasist and unfair agains non Islam.

      All love❤️

      • wrong. Many non-Muslims work in Islamic Banks. Top Swiss bankers for instance work at Geneva based Islami9c Bank

        • By the grace of Allah I do have quite a good experience with domestic workers. Yes, it is difficult to explain to them the concept of halal. Consequently, yes, we feel more comfortable with a Muslim cook. You strange kind of Muslim do not care about halal and pork and alcohol, while we, the other 99.999 % do bother about it – more or less strictly. (by the way, whom do you call ‘idiot Muslim’? Let’s avoid such expressions if possible…)

    3. @ Rafiq —- whom do you call ‘idiot Muslim’?—

      I am glad you ask me: this is my clarification “idiot Muslim”
      God say:
      I gave 2 eyes but they pretend as a blind
      I gave 2 ears, but they pretend as a deaf
      I gave Al Quran as true guidance, but they do not follow it,
      they follow the extremist clerics who deceive them and bring disaster on them.
      The followers of the extremist Muslim who kill innocent children and women in the name of Islam are the idiot Muslim or crazy Muslim.
      It is clear Rafiq? There are millions idiot Muslim in this world to day. We need to educate them with the true – Modern Islamic teaching. Otherwise we cannot defeat the extremist Muslim. Education is the main solution to create
      Peace, happiness and prosperity.

      I believe that Prigressive Muslim and Ahmadiyyah can work together to modernize Islamic teaching in 21th Century. Can we?

      All love❤️

    4. Rafiq—. You strange kind of Muslim do not care about halal and pork and alcohol, while we, the other 99.999 % care about it===

      You already forgot Rafiq?
      99.999 percent Muslim do not believe that there is a prophet after Prophet Muhammad
      99.999 percent Muslim do not believe that Label Halal is the act of discrimination or un-Islamic law.

      Now, what next allegation to me?
      All ❤️

    5. Rafiq, Hopefully Rafiq follow Allah and sunnah rightly

      Remember ! And if you obey most of those ( radicalism )
      on the earth, they will mislead you far away from Allâh’s Path. They follow nothing but conjectures, and they do nothing but lie. Q. 6:116

      It means that the majority is not always RIGHT.
      Hopefully, we are minority are the right path of Islam.
      Do not feel bad, Rafiq, even we are minority group in Islam.

      Allah say. Few People will enter Paradise, Rafiq!
      All love❤️

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