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Product Category: Projects

Product Code: 00006005

No of Pages: 34

No of Chapters: 5

File Format: Microsoft Word

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Title Page                                                                                i        

Approval Page                                                                        ii

Declaration                                                                              iii

Dedication                                                                               iv

Abstract                                                                                  v

Acknowledgement                                                                             vi


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


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


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


5.0     Summary, Conclusion & Recommendation                                      21

5.1     Summary                                                                                 21

5.2     Conclusion                                                                              21

5.3     Recommendation                                                                     21




          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.





          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.


          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.


(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.


          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.




          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.


          Due to lack of time, resources, the information data available used in conducting the research is limited i.e. Jaiz Bank.


          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.



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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