Exploring the Distinguishing Features of Islamic Banking in Tanzania
Abstract
Description
Despite its growth, Islamic banking has not escaped criticisms that Islamic banks are not really
Islamic. To address that gap, this study was conducted to assess the distinguishing features of
Islamic banks in Tanzania. This study used four criteria: compliance with Islamic principles of
finance; selection of customers for Islamic banking; structuring conventional banks to follow
the Islamic principles as well as competence of Sharia Supervisory Board (SSB) to guide and
advise banks. Using descriptive analysis from 60 respondents (customers and officials of two
conventional banks which have introduced Islamic banking), the study found that there is
limited awareness in case of compliance with Islamic principles of finance as selection of
customers is not purely based on Islamic principles and hence limited religious influence,
limited structuring of banks to comply with Islamic principles as well as moderate competence
of SSB. On the basis of current findings, the study, therefore, concludes that it is very difficult
for these banks operating in Tanzania to be termed as really Islamic.
Keywords
Islamic Banking, Sharia, Sharia Supervisory Board (SSB), Profit-Sharing Model (PLS), Conventional Banking