Islamic banking is interest-free banking inspired by Islamic law. Its uses include mudarabah (profit sharing), murabahah (advance purchase with later sale at marked-up price), ijarah (leasing or long-term credit), and musharakah (equity sharing). The first modern Islamic banking institutions were farmer credit unions in Pakistan in the 1950s and the Mit Ghamr Savings Bank in Egypt (1963). Major expansion came in the 1970s due to oil revenues and growing economies in the Persian Gulf and the rising desire for implementation of Islamic values in all spheres, including economic and financial. Gulf business interests strongly supported the Islamic banking movement, which has spread beyond the Muslim world into the West. Islamic banking today is particularly strong in Malaysia and Indonesia. Islamic financial instruments increasingly are accepted internationally, even in non-Islamic countries. In Iran and Pakistan, the financial system was reorganized in the 1980s to bring it into conformity with Islamic law.
See also Economics (Islamic); Islamic Develoment Bank