TABLE OF CONTENTS
Title Page i
Approval Page ii
Declaration iii
Dedication iv
Abstract v
Acknowledgement vi
CHAPTER
ONE
1.0 Introduction 1
1.1 Statement of the problem 2
1.2 Objectives of the study 3
1.3 Research Hypothesis 3
1.4 Significant of the Study 4
1.5 Limitation of the study 4
1.6 Scope of the study 4
1.7 Definition of Terms 5
CHAPTER
TWO
2.0 Literature Review 6
2.1 Meaning of Conventional Banking system 6
2.2 The Business of Conventional Banking System 6
2.3 Review of Interest-Free Banking System 8
2.4 Service of interest-Free Banking System 9
2.5 Islamic Prohibition of Interest 12
2.6 Christianity Prohibition of Interest 13
2.7 Emergence of Conventional Banking 13
2.8 banking sector and economic government
policies 14
CHAPTER
THREE
3.0 Introduction 16
3.1 Research Design 16
3.2 Population 16
3.3 Sample Size & Sample Techniques 16
3.4 Method of Data Collection 17
3.5 Method of Data Presentation & analysis 17
CHAPTER
FOUR
4.1 Introduction 18
4.2 Data Presentation 18
4.3 Data Analysis 18
CHAPTER
FIVE
5.0 Summary, Conclusion & Recommendation 21
5.1 Summary 21
5.2 Conclusion 21
5.3 Recommendation 21
Bibliography
ABSTRACT
The study seeks to investigate the
Extreme usefulness of conventional Banking and Interest free Banking which way
out, a case study of Jaiz Bank Plc. The researcher used both primary and
secondary data. The secondary data were generated from text books journals,
news papers, Quran, Hadith, Bible and Internet, the finding revealed that one
can justify the need for establishing an interest free banking in Nigeria by
looking at the moral, legal and socio – economic dimension of the society, It
is therefore recommended that seeking for an expert advice and assistance from
the countries where interest free banking exist.
CHAPTER ONE
1.0 INTRODUCTION
The banking business (i.e.
Conventional Banking) evolve out of the practice of goldsmiths who were entrusted with valuables
for which they issued paper-confirming receipt those receipts became negotiable
instrument overtime. In Italy the goldsmith used to sit in benches while
transacting their business. The word “Banco” meaning bench in Italian language
gradually became “Banking” a term now defined in various terms. Banking
business started in Nigeria in the year 1892 with the establishment of the
African Banking Corporation two years later in 1894 the British bank for West
Africa was established which took over. The African Banking Corporation in 1922
BaclaysBanking joined the race.
The first indigenous banks the
National Bank of Nigeria was established in 1933. The African Continental
Banks, the Nigeria Famous Bank and Commercial Bank Limited joined the business
in 1977 and 1945 respectively. Although the industrial and Commercial banks,
the Nigeria Mercantile Bank and the Nigeria Penny Bank were established in 1932
and 1945 respectively, they collapsed in 1936. This caused some losses to the deposition,
which re-emphasized the need to enact legislation controlling the
establishments and operation of banking which had hitherto been demanded. While
the emergence of interest free banking the first attempt in the camp temporary
world to establish a bank on Islamic principle was in Egypt July 25, 1963, with
the opening of nitghamr saving bank in the northern Delta region of the Nile in
a town with a population of 40,000. The purpose of the bank was to offer
interest free loans for socially beneficially Islamic banking dates only from
the mid 1970s when OPEC countries began to immense wealth and the need for an
Islamic order to channel these finance ministers met in Jeddah, Saudi Arabia,
to find an international financial institution to promote economic development
and social progress in the Islamic world. The result was then establishment of
Islamic Development Bank (IDB) Thus,
following the establishment of Islamic Development Bank (IDP) a number of Islamic Bank were establishment
both Muslim and non-Muslim countries. Arabia, Sudan, Egypt, Mauritania, China,
BahrainIran, Turkey, Switzerland England and South African.
In Nigeria, the first Islamic banking
license was given to Jaiz Bank Plc by CBN in 2003/204 to operate non-interest
banking.
1.1 STATEMENT
OF THE PROBLEM
The present society becomes firmly
built on the structure of materialistic ambition; interest lends to fuel these
social desires. Quick money is what people want and banking interest is one of
the quickest means of making money. All you have to do is deposit money and at
month end it will give birth to bundles, it became capable to change and
receive interest while others especially the Muslims do not go for interest
because of the verses in the Holy Qur’an which forbids the chargely and
receiving of interest. Also, some Christians do not accept interest because the
Bible has forbid it. However, many Islamic economists are of the opinion that successful operation
of interest free banking can only be ensured in a country were interest is
legally prohibited. This research will look at the conventional banking system
and interest free banking then finally the way out.
1.2 OBJECTIVES
OF THE STUDY
(i) To investigate the difference between
conventional banking and interest free
banking system and find out the one that will be best beneficial to the
society.
(ii) To find out the effects of conventional
banking and interest free banking in a
national economics.
1.3 HYPOTHESIS
Hypothesis is a set of propositions to
explain the subject under study in a short statement. It is a set of statement
generated in respect of the problem under study. In this research project the
validity or otherwise of the following hypothesis will be tested.
H0: Financing of conventional Banking is more
profitable and productive oriented compound to interest free banking.
H1: Financing of Interest free Banking is more
profitable and productive oriented compared to conventional banking.
1.4 SIGNIFICANCE
OF THE STUDY
Conventional banking system agrees
with the interest free banking in all its working procedure except in the issue
of condemning charging and receiving interest. Likewise, interest free banking
agrees with the conventional banking system except in the issue of interest and
risk bearing. In other word, one of the significance which Islamic banking is
peculiar to is the idea of correcting certain failures like interest, risk
bearing and extension of services. Moreover, this study attempt to explain the
aspect of both the conventional banking and interest free, the need of interest
free banking and what services do the banks (conventional and interest free)
provided. However, the time and financial constrains are factors that made some
information out of this research project not hundred percent sufficient.
1.5 LIMITATION
OF THE STUDY
Due to lack of time, resources, the
information data available used in conducting the research is limited i.e. Jaiz
Bank.
1.6 SCOPE
OF THE STUDY
As it is habitual and of a academic
significance to especially identify the area to cover in the research
undertaken, but due to vast nature of this topic all the technicalities
involves in the study of the research is limited only to kano and Jigawa
locality in the field of conventional banking and interest free banking.
1.7 DEFINITION
OF TERM
CONVENTIONAL BANKING:
It is a banking system in which loans are given to people at fixed interest
rates and more the time period taken to pay.
INTEREST FREE BANKING:
Refers to a system of banking activities that is consistent with Islamic law
(Shariah) principle and guided by Islamic economics. The contemporary movement
of Islamic finance is based on the belief that “all form of interest areriba
and hence prohibited.”
BANKS:
This is a dealer in money and credit holding itself out of receiving from
public deposit and repayable on demand by the used of cheque.
INTEREST:
This is the money paid for the use of money lent or for forbearance of debt.
PROFIT SHARING:
These are financial obligation between the share holder’s on behalf of profit
or these refers to the certain percentage ratio that share between the share
holder’s and the limited liability company on behalf of profit.
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