Understanding the Islamic Banking System in Indonesian Modern Economics Practices

Abstract

The recent awakening of Islam has influenced many aspects of human life, including financial management based on Islamic law. There have been many conventional banking systems throughout the country, the trend of Islamic banking remains the prima-donna, especially for the Moslem themselves, so that more and more conventional banks are converting their banking systems to the Islamic banking system. This paper aimed to refresh the understanding of the Islamic banking system in Indonesian modern economic practices. To answer this study's problems, we have conducted a series of literature reviews on the Islamic banking system and the conventional banking system in the modern economic context. By connecting all related aspects, we can finally summarize that Islamic banking is very different from the conventional bank system. The difference is the principal between fund owners and bank owners. In the modern economic practices, Islamic banking has become a world phenomenon, especially in Indonesia, where the existence of sharia banking is lighter in the contract management system and legal principles, the mutual benefit approach, banking organization, a more unified financing system between banks and customers or creditors.