Convergences or divergences between: Islamic banks and conventional banks

Abstract

The financial landscape is increasingly characterized by the coexistence of Islamic and conventional banking systems, each with distinct principles and operational mechanisms. This paper explores the convergences and divergences between these two banking paradigms. On one hand, both Islamic and conventional banks aim to mobilize savings, provide financing, and generate profit; however, they do so under different ethical, legal, and financial frameworks. Conventional banks operate primarily on interest-based transactions, adhering to secular financial regulations. In contrast, Islamic banks operate under Sharia law, which prohibits riba (interest) and promotes risk-sharing, ethical investments, and social justice.