ZUBAIR, Muhammad Basiru
Department of Accounting, Bayero University, Kano
Email address:
SADIQ, Rabi’u Abdullahi
Email address:

One of the most fundamental aims of Islam is to realize greater justice in humanity. Nevertheless, this is
not possible unless all human institutions, including the financial system, contribute positively towards
achieving this objective. One of the needs for this, is to subject all aspects of human life, social, economic
and international, to moral values. This will help toward maximization of wealth and want satisfaction as
the highest measurement of human achievement. Although Islamic banking is for all, irrespective of
religion, but the great expectation is for Muslim to distance themselves from interest/usury as it is
forbidden and unacceptable. That is why Islam has its own economic system which is based on social
justice and improved welfare of the whole humanity. The Nigeria financial system is a product of
capitalist economy and therefore, the concept of interest-bearing instrument is relevant to the system. It is
hard to imagine that there is an alternative to the interest-bearing financial system. Islamic banking is an
alternative form of financial intermediation that is based on profit sharing; but with a moral dimension
based on Islamic value system. It is not the only type of profit and loss sharing banking based on noninterest principles, but is the most developed form that has international acceptance and appeal. Although
base on a religious law, it is nevertheless, not a religious product exclusively preserved for people of a
particular religion. It is universally accessible to and enjoyed by people of diverse religious affiliation or
ethical beliefs across the globe. A key element under the concept is that lending is not a business and
linked to this, therefore is the no-interest rule. Thus, one cannot earn interest on a loan or require to pay
interest on loans. Any pre-determine interest is prohibited.

Keywords: financial institutions, Islamic banking, Mudarabah agreement, small scale enterprise.

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