buy custom Light Emitting Diodes essay

buy custom Light Emitting Diodes essay Introduction A light emitting diode is a semi conductor device that gives out infrared or visible light after it has been charged with an electric current. It has a wide range of uses for example in the brake lights and rear windows of vehicles, indicator lamps, full color posters, bill boards and also alphanumeric displays. They are also used as a source of light in fiber optic telecommunication; in television remote controls and autofocus cameras. This paper seeks to discuss in detail the functioning of light emitting diodes. History of Light Emitting Diodes In 1907, a British engineer and inventor H.J Round was the first to report the emission of light when he passed current through a semi conductor rectifying junction. Round used a used a contact that was in between a silicon carbide crystal and a metal wire. The John Allens group, at the Services Electronics Research Laboratory was the first to come up with first practical visible light emitting diode. The company set u a small production line in 1962. They used gallium phosphide that had controlled amounts of oxygen and zinc. Initially, this device was called crystal lamps, before it became known as light emitting diode. From 1962 into the late 1970s, the devices made of zinc and oxygen dominated the LED market (Physics and Anatomy) The General Electric Corporation was the first company to offer commercial Light Emitting Diodes. Their product gave out radiation in the red part of the spectrum. However, the company manufactured these products in low quantities as a result of the price of the product. A single light emitting diode went for 260 US Dollars. The LED was at that time offered through the Allied Radio Catalog which was widely distributed that dealt in amateur radio electronics. The mass production of LEDs came about in 1968, by the Monsanto Corporation. The company established a factory that produced low cost LEDs. Monsanto then formed a collaboration of some sort with Hewlett Packard Corporation; it was expected that Monsanto would provide the raw materials whereas Hewlett Packard would produce the LEDs. This relationship however did not last long because Hewlett Packard felt uneasy about the idea of depending on a single source for its raw materials. From the late 1960s to the mid 1970s, the greatest demand for LEDs came from calculators and then wrist watches; after the Hamilton Watch Corporation came up with the Pulsar digital watch. These two used numeric LED display. M. George Craford a manager and technical innovator at Monsanto, made huge contributions to the development of LEDs, with the most notable being the pioneering demonstration of a yellow LED (Shubert,F. pg 8-9). The Technology of LEDs In the light emitting diodes, the emission of light results when the positive hole and the negative electron, which are charge carriers, are injected into the semiconductor metallic contacts that are organic. These contacts are made on the opposite sides of the polymer films that are responsible for semi conducting. As soon as the hole and the electron come under the influence of the coulomb that they share, there is an attraction right inside the substance they recombine in thereby resulting in the emission of a photon. The emitted lights wavelength is dependent on the band gap of the semiconducting polymer. The holes and electrons are spin-1/2 particles, the resultant exciton can be a single exciton or a triplet exciton. Should the spin of the incoming charge carriers be random, then 75% triplet excitons and 25% singlet excitons will be formed. In a polymer material that has a relatively weak spin orbit coupling, the only excitons that can recombine in a radiative manner are single t excitons. This is because the ground state is a singlet state. LED is based on the principle of the injection luminescence principle. The LED is constructed of gallium arsenide phosphide, gallium arsenide, gallium phosphide. Silicon and germanium are not suitable since p-n junction prduce heat and hence no visible light. The LED consists of p-n junction diode in which diffusion of potential is generated in the depletion layer between the n-type and p- type materials. The LED junction is connected in the forward biased mode. Electron move across the junction from n- type to p- type material thereby make the hole and the electron to recombine. The diffusion potential inhibits electrons and holes from leaving the n- and p regions since they enter opposite regions (Physics of Light Emitting Diodes). Applying the external forward biased voltage, V, the barrier is reduced to e(. If Vthe barrier becomes zero enabling electrons to flow from n- side to p-side. The electron injected into the depletion layer recombines with holes thereby emitting a photon energy which is given by the formula hv. LED characteristics During forward biased state, the current increases rapidly and hence there need to protect the LED to prevent it from getting destroyed. The light output is linearly proportional to the current within its active region. LED can operate at low voltages and they dont consume a lot of energy since all the energy is converted into light energy. They should not be operated at more than 40mA or 2.2V. The range of wavelengths that can be visible is from 0.4 m to 0.7m. LED symbol The symbol for an LED is as shown below. Types of LED There are four major types of LED and these are pinned LED, surface mounted LED, power LED and chip on board LED. Pinned LED is made from metal lead frame. Light emitting die is placed on the lead frame and molded around the frame forming LED. They can be diffused pinned LED that give a wide angle of light or water clear that give more directional beam. They are easy to use and easy to assemble. The surface mounted LED has the smallest body into which the light emitting die is mounted. They are fitted into Printed circuit board. They are ideal at a premium space where they offer wide view angles of light. The other type of LED is Power LED which gives high light output. They are mounted on heat conductive material (heat sink) that draws away heat from LED die to avoid damaging the LED. The chip on board type of LED uses a die bonded directly to printed circuit board or substrate that eliminates the body of an LED. The bonded die is covered in a clear protective resin which is hard to the die from being damaged. Its advantage is that it is less costly and they are small (LED lighting and signs). New types of LED Semiconductor technology has resulted into Innovation of new devices. These new device types are surface-emitting (large area) LED (SLED), micro-cavity surface emitter, edge-emitting LED (ELED)and super-luminescent diode emitter (SLD).Surface-emitting LEDs (SLEDs) are the conventional LEDs which emit light from relatively large surfaces oriented orthogonally to the axis of the emission pattern. Micro-cavity surface emitters are SLEDs with an internal mirror and layer thicknesses closely fitted to act as a low-finesse Fabry-Perot cavity and they do not show optical gain. The cavity is added to reduce the optical line width as well as the emission half-angle because a layer thickness forming the cavity reduces emission efficiency at larger angles Edge-emitting LEDs have a device structure similar to that of the ridge wave guide laser but it does not have sufficient gain to lase. Typical dimensions of the emitting stripe are 3 3 100 m and it has active region hundreds of microns long. The energy density is concentrated in the long active region making it to achieve high radiances at the emitting facet thus; it becomes much easier to launch the light into an optical fiber. The emitting geometry for this device is different from the SLED. Super-luminescent edge emitters are similar to edge emitting LEDs, but they have wider central portion of the cavity than the emitting facet to allow more photons generated within the device reach the emitting facet than for a uniform cross-section, standard edge emitter, hence increases the emmitted radiance (ICNIRP). Considerations for use LED specifications applicable to safety Radiance (brightness) is conserved and it cannot be increased by optical lensing and manufacturers specification sheet for an LED which is expressed as either radiance or luminance is not given. The radiant intensity is always specified. When the apparent source size is known, then LED radiance can be calculated. The actual source size is applicable in cases where no lens is incorporated, magnified and that apparent source size must be used all hazard assessment. Exposure guidelines for eye safety Occupational and public health exposure limits and guidelines state that LEDs should be treated as incoherent optical sources where different hazards are assessed severally over a range of wavelengths. Incoherent-source limits are more applicable to certain types of LEDs than others. Conventional, surface-emitting LEDs are radiance limited and many eye injuries have not been documented for LEDs. Laboratory efforts to create ocular injury with high-power LEDs have been unsuccessful while laboratory studies using diode lasers produced retinal injury. Applications LED Displays Many businesses use LED lighting on their signs. Hey are also used in gas stations especially where the prices of gas are displayed, this gives the owner to change prices easily unlike in the old manual way. LED Flashlights Flashlights made of LED can be as little as key chains to high powered lanterns that are big in size. They are also used for traffic safety especially where roads are under construction where they are used to steer traffic away. LED Lights for the Home The use of LED lights is gaining popularity day after day especially for their use at home. It is increasingly being seen as a substitute to florescent lighting. They can be used as 121 volt DC light bulbs, flood lights, motion detecting lights among others. Led is also used in making toys and accessories such as glow sticks and it can also be used to light up jewelry for example necklaces, hair accessories, rings and bracelets. They are also used in making Christmas lights (Quinn,Lydia.). Advantages and disadvantages of LEDs Light emitting diodes are very efficient; they do not use a lot of electricity hence they are economical. The light emitted by an LED bulb is regarded to be a cool light therefore; one gets more light per watt as compared to an incandescent bulb. LED lights come in a wide range of sizes; they can be as small as 2mm or even less, unlike incandescent bulbs. They can therefore be used in instances where a regular bulb cannot be used. These bulbs also come in a range of colors without necessarily requiring filters so as to produce these colors. LED can come in almost any color one could think of; the color depends on the material of the semiconductor and is therefore easier to come up with different colors. LED lights have the ability to achieve their optimum level of brightness in a few micro seconds, in other words, they have a more efficient on/off time. Light emitting diodes last longer than incandescent bulbs. One can therefore get value for his money because of their lifetime. They also last longer and manage better for cycling; they dont burn out that quickly and they are therefore economical (ledlights.org) The main disadvantage of LEDs is their high cost. They are expensive on the basis of start up costs. These costs can be attributed to the low lumen output and power supplies that may be needed (ledlights.org) Conclusion Although the LEDs are expensive to use for the lighting applications because they are manufactured using the advanced semiconductor materials, they are the most cost effective lighting option in many situations. For instance, their long run lower costs make them better as compared to other light sources and they will play bigger role in the technology sector. Buy custom Light Emitting Diodes essay

Marriott International Essay Example | Topics and Well Written Essays - 750 words

Marriott International - Essay Example It should be noted that the company tries to occupy different positions on the mind of each customer through its different product lines. After looking at its different positioning strategy, this paper will identify the strategic issues or risks faced by the organization. Lastly, it will also offer recommendations based on the conducted analysis. Marriott International offers an extensive array of accommodation products and services. The company's products range from affordable to luxurious lodging. It can be deduced that the company provides customers with the most basic accommodation packages at lower prices while it also excels in offering the luxury of value added services and fulfilling even the unfulfilled wishes of their guests. Marriott International's portfolio is composed of 16 brands: Marriott's Hotels and Resorts; JW Marriott Hotels and Resort; Renaissance Hotels and Resorts; Courtyard; Residence Inn; Fairfield Inn; Marriott Conference; TownePlace Suites; SpringHill Suites; Marriott Vacation Club International; Horizons; Ritz-Carlton Hotel Company; Ritz-Carlton Club; Marriott Execustay; Marriott Executive Apartment; and Grand Residences (Mariott International 2006). These various brands are marketed using different marketing mixes. However, it can be seen that Marriott International generally uses five major strategies-cost leadership, differentiation, focused cost leadership, focused differentiation, and integrated cost leadership and differentiation. It should be noted that Marriott pursue cost leadership in its Fairfield Inn brand which provides "consistent quality lodging at an affordable price." Differentiation is applied to its luxury brand Ritz Carlton and JW Marriott. It should be noted these hotels offer plain accommodation services but "experiences." Focused differentiation is applied to Marriott Vacation Club, ExecuStay, and Renaissance which accommodates a narrow segment of the market by offering highly differentiated service. The company employs focused cost leadership through its SpringHill Suites. Much of its product line banks on integrated cost leadership and differentiation like Courtyard and TownePlace Suites. The sales trend of Marriott International proves that both corporate and business unit strategies of the firm are working for its benefit. Right now, the company boasts of recording approximately $20 billion. Even though Marriott occupies different places in the mind of its customers, the company was able to strengthen its competitive position through its aggressive marketing efforts. The company was able to avoid confusion by strategically designing marketing mixes which clearly delineates one brand from the other. This was done by differentiating the products, promotion, and price strategies for each brand. What is notable though is Marriott's strong commitment in extending excellent service to its guests. The company often differentiates its products not only on the unique lodging designs and features but also on the service extended by its staff. Marriott banks on its capacity of knowing the needs and wants of its clientele. The company's aggressive effort of instilling unique f eatures to its products in its entire portfolio really paid off. 3.0 Recommendation Since

Things Required For Writing a Custom Serializer

Things Required For Writing a Custom SerializerIt's not difficult to write a custom serializer, but there are a few things required for writing a custom serializer that you really shouldn't skimp on. Having the wrong number of keywords in your document is one thing, but having them all wrong can be even worse. Let's look at some things that you might not be thinking about.The first thing that you should consider is having your website design built around your serializer. By this I mean that you should always be thinking about how your browser works and using those tools to design your web pages and keep them maintained. When you're designing a custom serializer, you need to be doing the same thing, but it isn't a good idea to think about just the serialization part. If you have some web site where you're only interested in sending HTML data between two computers and your business is all done in JSON, then you really shouldn't use a custom serializer, but if you're doing something lik e sending images, or videos, or doing something that has some complex encoding then it's important that you make sure that you have a strong serializer to read those things correctly. When it comes to the web, the more you know about the tools that you use, the better.When it comes to the content of your web page, the next thing that you need to think about is the number of words that you should put in each of the fields of your custom serializer. When you're designing a custom serializer, you should really be thinking about the number of words that you put in each field.Going into detail with this is tough because it would require a chapter to explain all of this. However, the best way to go about it is to start out with your business, and then move onto the design of your web site. If you do that, you'll probably end up with a really fast-loading, really user-friendly, super user-friendly site.The last thing that you need to look at are where the external variables and the seriali zation are going to happen. If you're trying to build a web site, that means that your serializer should be on the web server, and any time you do any sort of retrieval, that's going to happen on the server as well.When you're creating your custom serializer, you're going to see it through a lot of changes, and if you aren't careful about these things, it's going to end up being a big mess. Make sure that you take these things into consideration when you're designing your custom serializer.So, there are a few things that you should look at when you're trying to design a custom serializer. Make sure that you make sure that you're taking the above into consideration when you're doing this.

Cheap Custom Essay Writing Services in Usa: the Ultimate Convenience!

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The Key to Successful Writing about Myself Essay Guidelines

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Emotional Intelligence Self Assesment Essay Example | Topics and Well Written Essays - 750 words

Emotional Intelligence Self Assesment - Essay Example In all these, my performance was largely dependent on the impact of my personality on the people around me. In sum, I have been able to summarise my strengths and weaknesses into four main categories. In terms of strengths, I have I posses the characters of trustworthiness, and teamwork and cooperation. With regard to my weaknesses I possess the characters of poor communication and lack of self-confidence. The positive attributes of my characters have always provided the necessary synergies for growth and excellence. On the other hand, the negative qualities have often posed challenges in my performance within various discourses. Trustworthiness is an attribute that promotes the element of harmony at the work place. It is a positive trait that attracts people to others towards the pursuit of common goals. Trustworthiness provides the glue that holds people together towards a common purpose (Goleman 81). It encourages processes of leadership, delegation and team work. My quality of trustworthiness has been most evident in situations that required cooperation and group work. I rate myself at 9. I have always believed in the abilities and honesty of others. At social and professional associations, friends often remark that I bestow a lot of trust in my groups and colleagues to such levels that enable me to win favours and the confidence of the organization. Sometimes I have often felt that I risk running down processes by bestowing unchecked trust to people of varying levels of competencies. However, I retain the belief that positive working relationships can only be achieved through the cultivation of trust and confidence to the environment and the people around. This, I believe, fits well into the discourse of professionalism and work ethics. Teamwork and collaboration are key determinants of success. An organization will always have people of varying levels and kinds of competencies. Embracing teamwork and collaboration helps people to adjust

Customer Awareness Toward Islamic Accounting Theory

Customer Awareness Toward Islamic Accounting Theory CHAPTER 1: INTRODUCTION 1.1 BACKGROUND OF THE STUDY Islamic banks considered as an active player in the world economies over two decades ago (Ahmed S., 2009). The principles accounting upon which Islamic banking is based have been universally accepted for centuries rather than decades. The fundamental principle of Islamic financial institutions is the prohibition of Riba (interest). It is manifest that Islamic accounting theory were practiced mainly in the Islamic country throughout the middle ages, development trade and business activities. In order to understand what services that Islamic banks offer, it is essential to maintain an acceptable level of information of the basis behind it. It has been argued that the Islamic banks have not introduced any new services since their first existence in the 1970s, in fact they have tried to comply with the rules of the Islamic religion specified for these types of actions. High requests to assess Muslim customers perception and attitude toward Islamic bank services. Islamic banks understand that its paramount important to measure the degree of its customers awareness as well as to improve services. The financial institution follows the rules that Holy Quran and hadith have set to guide the Muslims in their financial matters. The Islamic financial system employs the idea of participation in the project, utilizing the funds at threat on a profit-and- loss-distribution basis (Ahmed, S., 2009). 1.2 STATEMENT OF THE PROBLEM During the last three decades, Islamic finance institutions have been rising significantly, both nationally and internationally (Ahmed, S., 2009; Iqbal Abbas, 2007). These firms were recognized in the emerging market of the Middle East to meet the order of investors and borrowers who are motivated by income maximization derived from the Islamic law (Sharia). Islamic finance institutions offer an extensive range of Islamic financial innovations from the simple agreement of profit-sharing agreement (Mudaraba) that is parallel to time deposit in conservative banks, to issue Islamic bonds (Sukuk) and derivatives. In gulf countries, the state of Kuwait banking industry considered on of the leaders in Islamic financial market. The growth of Islamic finance institutions in Kuwait has attracted some of the conventional financial firms (e.g., NBK IFIH, and Citibank) to add the service of Islamic windows to their clients. In spite of the advantages that are fixed in Islamic finance system and management, Islamic finance institutions encounter numerous primary challenges to the prospect of being recognized internationally. The challenges exist in local as well as global markets. On of these challenges is to assess the degree of awareness in Islamic accounting theories. In their study, Gerrard and Cunningham (1997) reported that Muslim respondents, though aware of basic conditions in Islam, were almost wholly ignorant of the sense of specific Islamic financial conditions like Mudaraba, Musharaka and Ijara. As result, many Islamic financial providers seek to assess the level of social awareness of their tools that incorporate with Sharia. The understanding of customer degree of awareness are paramount important to determine firms endowment to promote Islamic accounting theories. Bankers also seek to explore the reasons behind dealing with Islamic banks to better understand and improve services provided. Another challenge that faces Islamic financial institutions is that, as service provided they have to understand customers perceptions and attitude toward the services provided to better understand customers need, want, and improve their services. With no understanding to customer perceptions and attitude Islamic banks may have no means to better develop their services and improve customer satisfaction and compete in the local as well as the international market. The current study seeks to assess the level of customers awareness of Islamic accounting theories and to explore their perceptions and attitude toward these tools that incorporate with Sharia. 1.3 OBJECTIVES OF THE STUDY Islamic financing is an important area of contemporary academic and policy interest. Opposing views in the area are analyzed in the light of empirical evidence. Measuring the degree of customer awareness toward Islamic accounting theory and their perception and attitude toward Islamic tools will shape the future of Islamic financing. The current study attempts to reveals the degree of customers awareness toward Islamic and efforts bestows to improve their awareness in order to assist Islamic financial institution to determine the efforts needed to raise this awareness and improve their attitude and perceptions. Another objective of this study is to explore customers perceptive and perception toward Islamic transactions thus Islamic financial institutions can better understand their customers and improve services provided. 1.4 SIGNIFICANCE OF THE STUDY Islamic banks provide many financial services and are competing heavily in the Middle East with conventional banks. Customers nowadays go for Islamic bank loans for buying home, cars and even business setup, as the conditions are very clear and there are no rising interest piling up. To overcome the fierce competition, Islamic bank need to bestow efforts in rising the degree of awareness toward Islamic accounting and finical tools and improve customers perception and attitude. The study is of general theoretical importance as well as of particular practical significance for policy makers who intend to conform their existing financial systems to Islamic rules. Furthermore, at the practical level, the study aims to assist Islamic bank manager in providing empirically evidence how of Kuwaiti customers aware toward Islamic accounting theory and Islamic financial services. The study also provide framework for bank managers in measuring customers perception and attitude toward Islamic services and their usage of various products and services offered. At the theoretical level, the current study aims to develop the literature of Islamic accounting theory and explain how these theories are to be implemented in the Islamic financial institution who adapts Sharia. 1.5 THE SETTING OF THE STUDY In the Gulf Co-operation Council there are growing number of Islamic banks are also taking steps towards greater clearness and stronger authority structures. The state of Kuwait for example, has been taking a number of steps to reinforce its local Sharia-obedient institutions, including slowly moving in the direction of a latest regulatory framework for sukuk. In conversations with OBG, manufacturing insiders explained that due to a lack of suitable legal mechanisms, Islamic finance companies are not allowed to issue sukuk in Kuwait, which forces Kuwaiti companies to work through other markets, such as Bahrain. Given the massive increase in sukuk issuance worldwide, pegged at nearly $17 billion (in the Gulf alone, the growth rate since 2001 has been nearly 45%), Kuwaits financiers are keenly aware of the need for proper rules regulating sukuk. Sheikh Salem Abdulaziz Al Sabah, the governor of the Central Bank of Kuwait (CBK), said earlier of 2008 that regulations are wanted, saying that the CBK is keen to provide a legal system to regulate Islamic investment tools such as the issuance of sukuk, especially in light of growing demand. We are optimistic a solution will soon be found. In state of Kuwait, the Islamic financial sector and its sharia-compliant companies are the increasingly global. Kuwait Finance house Bank (KFH), as an example, in addition to its Turkey, Malaysia and Bahrain ventures, newly established a subsidiary with a pair of Chinese firms to discover real estate investments in the Chongqing region of a middle China. In a more high-profile move, Investment Dar, one of Kuwaits biggest Islamic investment companies, recently funded a takeover of British luxury carmaker Aston Martin to the tune of $925 million. To achieve the purpose of the current study, the study focuses on a specific Islamic bank that located in the state of Kuwait. KFH has usually been one of the main engines behind the growth of Kuwaits sharia-acquiescent financial market; however, its enlargement and development indicates a growing maturity in Kuwaits sharia-compliant services zone, established by the push toward the regulation of Islamic bonds (sukuk) and the emergence of ever-stronger Islamic investment firms. KFH was the first Islamic bank in Kuwait and one of the pioneers toward adapting of Islamic accounting and financial theory in the gulf region. Beside the convenience, the research believe that exploring the degree of Islamic accounting theories of this bank may reveals highly reliable evidence of generalizing the finding in the state of Kuwait. KFH considered the main Islamic bank in Kuwait and the second-main bank of any kind in the country. Also to the huge injection of capital, KFH lately unveiled plans to set up its own subsidiary in Amman. The expansion of Islamic banks operations at home and overseas underlines the growing development of Kuwaits Islamic financial sector. Thus the study believe that investigating the customers awareness of Islamic banks toward Islamic accounting theory are justified and understanding their perception and attitude toward KFH is paramount important in attempting to improve service quality of Islamic firms. 1.6 LIMITATIONS OF THE STUDY This study is concerns with Islamic banking that located in the state of Kuwait as its difficult to include all Islamic banks related to resource limitation and time restriction. The study also does not analyze all Islamic accounting theory as it is very vast subject to control, rather than focusing on basic Islamic accounting theory that adopted by Islamic financial institutions and banks. Other limitation could be found related to: Sample size: The sample size for the bank customer is very large. Therefore, the collection of customer feedback will be costly in term of time and money. The study aims to attain around (150) survey for the purpose of analysis, which may considered one of the study limitation. Data collection: It may be difficult to distribute and collect all data and forms since the study is targeting to collect feedback from the entire bank customers. 1.7 DEFINITION OF TERMS The current study includes many Islamic terms and concepts that will be stated as in Arabic meaning, some of these concepts are: Halal: The actions or items that Muslims can have access to. Haram: The actions or items that Muslims are banned from Riba: What is known in the west as the interest. Maysir: It means Games of chance such as lottery, gambling and it is usually referred to as Haram. Takaful: It is a form of insurance in the Islamic religion which will be explained in the essay. Gharar: Deception, hazard, speculation, uncertainty, risk (literally, peril or hazard) Mudaraba: Is a trustee financing contract, where one party, the financier, entrusts funds to the other party, the entrepreneur, for undertaking an activity Mushakara: It is an equity participation contract, whereby two or more partners contribute with funds to carry out an investment Muqarada: Loan Participation Qard Hassan: It is a benevolent loan (interest free) Sharia: It is Islamic religious law derived from the Holy Quran and the Sunnah 1.8 THESIS STRUCTURE The current study includes five chapters: chapter one described the background of this study, and consisted of the introduction, objectives and significance of the research. Chapter two reviewed the literatures on Islamic banking and theories. Chapter three explained the research methodology. The data analysis techniques and research findings were demonstrated and discussions in chapter four. Finally, chapter five exhibited conclusions and future recommendation. CHAPTER TWO LITERATURE REVIEW Its necessary to explore the literature of Islamic accounting theory in details in this chapter. This chapter attempts to review previous literatures on the topic of Islamic Accounting Theory and provides recent finding related to the degree of awareness of customers toward Islamic financial services. This chapter attempts provide recent study and articles about Islamic accounting theory that explain the nature of Islamic banks system. Previous literatures and studies have revealed that the first recent research in Islamic banking filed was conducted in Egypt under cover, without projecting an Islamic picture, for fear of being seen as a demonstration of Islamic fundamentalism, which was abhorrence to the political government (Siddiqi l988). These studies remain until l967 where nine Islamic banks open in the country (Ready l98l). These banks was neither charging nor paying interest, investing mainly by participating in trade and industry, directly or in partnership with others, and shared the profits with their depositors (Siddiqi l988). For that reason, Islamic banks functioned basically as saving-investment firms rather than as commercial banks that based on charging interests. The Nasir Social Bank, established in Egypt in l97l, was declared an interest-free commercial bank, although its charter did not refer to Islam or Shariah (Islamic law). Islamic banks appeared on the earth scene as dynamic players over the past two decades. Nevertheless, a lot of the values that based on Islamic banking usually accepted all over the world, for centuries more willingly than decades. The essential principle of Islamic banking is the ban of Riba (interest), while the essential occupant of Islamic banking the prohibition of riba, a word that encompasses not only the perception of usury, but also that of interest has rarely been recognized as appropriate beyond the Islamic world, a lot of its guiding values have. The majority of these values are rooted in simple ethics and general sense, which form the bases of numerous religions, including Islam. Interest or â€Å"Usury† was forbidden in both the Old and New Testaments of the Bible, whereas Shakespeare and many other writers, mainly those writing in the 19th century, have attacked the barbarity of the carry out. Much of the ethics championed by Victorian writers such as Dickens ranging from the fair division of wealth through to mans elementary right to work is obviously present in contemporary Islamic society. Although the western media oftenrecommend that Islamic banking in its current form is a recent occurrence, in fact, the essential practices and principles date back to the early part of the seventh century. (Islamic Finance: A Euromoney Publication, 1997) It is obvious that Islamic finance was accomplished predominantly in the Muslim world during the Middle Ages, encouragement trade and business behavior. In Spain and the Mediterranean and Baltic States, Islamic trades became vital middlemen for trading actions. It is claimed that several concepts, techniques, and tools of Islamic finance were later adopted by European financiers and businessmen. As Islamic finance is intertwined within its religion, the basis of the religion affects the finance in two important ways: Islam aims at building a socio-economic order based on justice and considers economic activity as a means to an end and not an end in itself. It enjoins Muslims to harness natural resources, which are a trust from Allah SWT, for carrying out rightful activities; but abhors exploitation and man-made inequalities of income and wealth (Al-Harran, 1993). Islam is extremely concerned with the problem of financial growth, but treats this as an significant part of a wider problem, that of total human progress. The crucial function of Islam is to lead human growth on right lines and in the right direction. Islamic principle deals with all sides of economic development in the framework of total human development (Al-Harran, 1993). The reinforcement of Islamic banking coincided with the world-wide festivity of the advent of the 15th Century of Islamic calendar (Hijra) in 1976. At the same time financial assets of Muslims mostly those of the oil producing countries, expected a boost due to validation of the oil prices, which had up till now been under the power of foreign oil Corporations. These proceedings led Muslims to struggle to model their lives in agreement with the principles and philosophy of Islam (Abbas Valadkhani, 2004). Islam not only prohibits trade in interest but also in liquor, pork, gambling, pornography and anything else, which the Shariah (Islamic Law) deems Haram (unlawful). Islamic banking is an tool for the progress of an Islamic financial order. Some of the salient features of this order may be summed up as: Islam urges individuals to seek their economic well-being. Islam presents a clear difference between what is Halal (lawful) and what is haram (forbidden) in pursuit of such economic activity. In broad terms, Islam forbids all forms of economic activity, which are morally or socially injurious. This God rule can be considered as a way to systemize the citizens. Islam makes it obligatory on people to spend their wealth judiciously and not to hoard it, keep it idle or to squander it while acknowledging them their right to ownership of wealth legitimately acquired. This can be compared with the communism principles that look for the welfare of the whole members of the society. While allowing an individual to retain any extra capital, Islam look for reducing the edge of the extra for the well-being of the society as a whole, especially the poor and underprivileged sections of society by contribution in the procedure of Zakat. It is the way the Islamic government intervenes to ensure that poor people can have a formal financial source. While making payment for the ways of human nature and yet not yielding to the penalty of its worst propensities, Islam seeks to stop the amassing of wealth in a few hands to the damage of society as a whole, by its laws of inheritance. Viewed as a total, the financial system, which visualized by Islam aims at social justice without inhibiting people project beyond the point where it becomes not only jointly harmful but also individually self-destructive. The Islamic economic system employs the perception of contribution in the enterprise, utilizing the funds at threat on a profit-and- loss-distribution basis. This by no means implies that investments with economic institutions are necessarily tentative. This can be barred by careful investment strategy, diversification of risk and sensible management by Islamic economic institutions. This system supports people to invest their money in those financial institutions to exploit their utilities by making profits under the guidelines of the Shariah. The concept of profit-and-loss sharing, as a basis of financial transactions is a progressive one as it distinguishes good performance from the bad and minimize the players in the market to be the people who know how to invest and when they inter the market to catch the goal. The main goals of an Islamic Banking and Financial system are to: Implement the value system of the Quran and the Sunnah (tradition or practice of Prophet MuhammadSAW) in the realm of the Muslim socio-economic system. Ibn Taymiyahr.a. (n.d.), a distinguished scholar of Islam, explicates this as follows: â€Å"In muamalat (business transactions) all activities are permissible unless forbidden by revelation (Quran) or the practice of Prophet Muhammad SAW†. The examples of prohibited business activities would include dealing in gambling, liquor, pork etc. The financial contracts of Islamic banks need to be clearly documented, equitable and avoid the elements of Riba, Gharar and Maysir as explained in the following section. Foster the growth of the economy of Muslim nations by developing financial markets, institutions and instruments. A well-developed capital market, with efficient institutions offering diverse financial facilities, can reduce the overall cost of capital. It can enhance social welfare by facilitating the acceptance of projects whose; present value of all relevant cash in-flows (benefits) after tax is greater than the present value of all cash out-flows (cost) of the project; or the expected internal rate of return is greater than a minimum threshold rate (or cost of capital). Furthermore, these necessary conditions should also be satisfied for each party financing the project to alleviate agency effects. This entails economic development, which is promoted in Islam, as Prophet Muhammad SAW exhorted Muslims to undertake business ventures (tijarah) as described in the following hadith Nuaym ibn Abd Al-Rahman has quoted the (narration). ProphetSAW as saying: â€Å"Nine tenths of earnings (Rizq) is in bai (business ventures), and tenth in cattle†. This was reported by Ibrahim Al-Harbi (Al-Iraqi, 1992) and by Said ibn Mansur (Al-Suyuti, 1990). Dampen the shocks of extreme economic output by promoting risk-sharing instruments whose payoffs are strictly contingent on the profitability of a firm or project at a micro level. Financial facilities with fixed costs can severely strain the resources of borrowers during a slowdown, which lead to bankruptcies and structural impairment of the economy. The gist of Islamic financial securitization is summarized by the following well-known hadith quoted by Kahf and Khan (1992), â€Å"Al-kharaj bi al daman.† This implies that entitlement of return from assets vests in the one bearing the risk of it. 2.1 CONVENTIONAL BANKING The main job for most of non-Muslim or conventional banks is preserved money and valuables and give loans, credit, and imbursement services, for example checking accounts, money orders, and cashiers checks. These banks furthermore may propose investment and insurance products, which they were once banned from selling. As a diversity of models for collaboration and integration amongst finance industries have appeared, some of the conventional distinctions among banks, insurance companies, and securities firms have reduced. Regardless of these changes, banks continue to preserve and carry out their main role—allowing deposits and lending funds from these deposits. There are several kinds of banks, which vary in the number of services they offer and the customers they serve. Although some of the distinctions among these kinds of banks have tapering as they begin to enlarge the vary of products and services they propose, there are still key distinctive behaviors. Commercial banks, which control this industry, provide a full variety of services for customers, enterprise, and governments. These banks come in a broad range of sizes, from large international banks to local and community banks. International banks are involved in global lending and foreign cash trading, additionally to the more typical banking services. However, a lot of commercial banks have also extended to present online banking, and some previously Internet-only banks are opting to release branches. Savings banks and savings and loan associations, occasionally called thrift institutions, are the second biggest group of depository institutions. They were first recognized as community-based firms to finance mortgages for people to purchase homes and still cater mostly to the savings and lending requirements of individuals. Credit unions are another type of depository institution. Most credit unions are created by people with a familiar bond, for instance those who work for the similar company or be a member of the same labor union or church. Members pond their savings and, when they require money, they may borrow from the credit union, frequently at a minor interest rate than that demanded by other financial institutions. Federal preserve banks are Government agencies that achieve numerous financial services for the Government. Their chief tasks are to control the banking industry and to aid implement our Nations financial policy so our economy can run more proficiently by directing the Nations money provide—the total amount of money in the country, including cash and bank deposits. Interest on loans is the main source of income for most banks, making their diverse lending departments critical to their achievement. The commercial lending department loans money to companies to start or enlarge a business or to buy inventory and capital tools. The customer lending department handles student loans, credit cards, and loans for home developments, debt consolidation, and automobile purchases. Finally, the mortgage lending department loans money to individuals and businesses to buy real estate. The money to loan comes mainly from deposits in checking and reserving accounts, certificates of deposit, money market accounts, and other deposit accounts that clients and businesses arrangement with the bank. These deposits often make interest for the owner, and accounts that offer checking supply an easy technique for creation payments safely without using cash. Technology is having a main impact on the banking industry. such as, many usual bank services that once needed a teller, for example making a withdrawal or deposit, are now existing through ATMs that let people to right of entry their accounts 24 hours a day. In addition, direct deposit permits companies and governments to electronically transfer payments into different accounts. Also, debit cards, which may also apply as ATM cards, immediately deduct money from an account when the card is swiped across a machine at a stores cash register. Electronic banking by phone or computer permits consumers to pay invoices and shift money from one account to another. Through these channels, bank customers can too admission information such as account balances and statement history. Some banks have started offering online account aggregation, which makes accessible in one place detailed and up-to date information on a clients accounts held at diverse institutions. Progressions in technology have also led to upgrading in the ways in which banks process information. Use of check imaging, which lets banks to store photographed checks on the computer, is one such example that has been applied by some banks. Other kinds of technology have deeply impacted the lending side of banking. such as, the availability and increasing use of credit scoring software lets loans to be accepted in minutes, rather than days, making lending departments more competent. Other basic changes are taking place in the industry as banks vary their services to become more competitive. A lot of banks at the present offer their clients financial planning and asset management services, as well as brokerage and insurance services, frequently throughout a subsidiary or third party. Others are starting to offer investment banking services that assist companies and governments increase money during the issuance of stocks and bonds, also usually during a subsidiary. As banks reply to deregulation and as competition in this sector raises, the nature of the banking industry will continue to undertake considerable change. 2.2 COMPETITIVENESS OF THE ISLAMIC BANKING INDUSTRY The crucial feature of Islamic banking is that it is interest-free. Although it is frequently claimed that there is more to Islamic banking, for example contributions towards a more fair distribution of income and wealth, and improved equity contribution in the economy (Chapra l982), it nevertheless obtains its specific rationale from the fact that there is no place for the institution of interest in the Islamic order. Islam forbids Muslims from taking or giving interest (riba) in spite of of the reason for which such loans are made and despite of the rates at which interest is exciting. To be certain, there have been efforts to differentiate between usury and interest and between loans for consumption and for production. It has also been argued that riba refers to usury accomplished by minor money-lenders and not to interest charged by contemporary banks and that no riba is occupied when interest is compulsory on productive loans, but these arguments have not won approval. Apart from a few disagreeing opinions, he general agreement among Muslim scholars obviously is that there is no variation between riba and interest. In what follows, these two terms are used interchangeably. The forbidden of riba is mentioned in four different revelations in the Quran. The first revelation highlights that interest removes wealth of Gods blessings. The second revelation condemns it, placing interest in combination with illegal appropriation of property belonging to others. The third revelation enjoins Muslims to keep on clear of interest for the sake of their own welfare. The fourth revelation set up a clear difference between interest and trade, influencing Muslims to take only the principal sum and to forgo even this sum if the borrower is not capable to repay. It is further declared in the Quran that those who ignored the forbidden of interest are at war with God and His Prophet. The forbidden of interest is furthermore cited in no unsure terms in the Hadith (sayings of the Prophet). The Prophet warned not only those who take interest but also those who offer interest and those who record or witness the operation, saying that they are all similar in guilt. It may be mentioned in passing that similar prohibition are to be found in the pre-Quranic scriptures, although the People of the Book, as the Quran refers to them, had chosen to rationalize them. It is remarkable that Islam has successfully warded off various subsequent rationalization efforts aimed at legitimizing the institution of interest. Some scholars relays on economic reasons to explain the reasons on why interest is prohibited in Islam. scholars argued that interest is a pre- determined cost of production, which avoid full employment (Khan l968; Ahmad n.d.; Mannan l970). In the same tone, it has been challenged that international monetary crises are largely due to the institution of interest (Khan, n.d), and that trade cycles are in no small measure attributable to the phenomenon of interest (Ahmad l952; Suud n.d.). None of these studies, however, has really succeeded in creating a causal link between interest, on the one hand, and employment and trade cycles, on the other. Others, anxious to maintain the Islamic position on interest, have argued that interest is not very effective as a monetary policy instrument even in capitalist economies and have questioned the efficiency of the rate of interest as a determinant of saving and investment (Ariff l982). A general line running through all these negotiations is the exploitative character of the institution of interest, although some have pointed out that profit (which is legalized in Islam) can also be exploitative. One response to this is that one must differentiate between profit and profiteering, and Islam has prohibited the latter as well. It began as a theological dream, but Islamic banking has become a practical reality across the Middle East. The question now is, how far will Sharia boards and western regulators let it spread? (Josh Martin, Middle East, Jun2005 Issue 357, p50, 6p) The Islamic prohibition on interest does not imply that capital is costless in an Islamic system. Islam realizes that money is a factor of production however; it does not permit the factor to pre-determined claim on the productive surplus in the form of interest. This has leaded to the question as to what will then substitute the interest rate mechanism in an Islamic framework. There have been propositions that profit sharing can be a viable alternative (Ka Customer Awareness Toward Islamic Accounting Theory Customer Awareness Toward Islamic Accounting Theory CHAPTER 1: INTRODUCTION 1.1 BACKGROUND OF THE STUDY Islamic banks considered as an active player in the world economies over two decades ago (Ahmed S., 2009). The principles accounting upon which Islamic banking is based have been universally accepted for centuries rather than decades. The fundamental principle of Islamic financial institutions is the prohibition of Riba (interest). It is manifest that Islamic accounting theory were practiced mainly in the Islamic country throughout the middle ages, development trade and business activities. In order to understand what services that Islamic banks offer, it is essential to maintain an acceptable level of information of the basis behind it. It has been argued that the Islamic banks have not introduced any new services since their first existence in the 1970s, in fact they have tried to comply with the rules of the Islamic religion specified for these types of actions. High requests to assess Muslim customers perception and attitude toward Islamic bank services. Islamic banks understand that its paramount important to measure the degree of its customers awareness as well as to improve services. The financial institution follows the rules that Holy Quran and hadith have set to guide the Muslims in their financial matters. The Islamic financial system employs the idea of participation in the project, utilizing the funds at threat on a profit-and- loss-distribution basis (Ahmed, S., 2009). 1.2 STATEMENT OF THE PROBLEM During the last three decades, Islamic finance institutions have been rising significantly, both nationally and internationally (Ahmed, S., 2009; Iqbal Abbas, 2007). These firms were recognized in the emerging market of the Middle East to meet the order of investors and borrowers who are motivated by income maximization derived from the Islamic law (Sharia). Islamic finance institutions offer an extensive range of Islamic financial innovations from the simple agreement of profit-sharing agreement (Mudaraba) that is parallel to time deposit in conservative banks, to issue Islamic bonds (Sukuk) and derivatives. In gulf countries, the state of Kuwait banking industry considered on of the leaders in Islamic financial market. The growth of Islamic finance institutions in Kuwait has attracted some of the conventional financial firms (e.g., NBK IFIH, and Citibank) to add the service of Islamic windows to their clients. In spite of the advantages that are fixed in Islamic finance system and management, Islamic finance institutions encounter numerous primary challenges to the prospect of being recognized internationally. The challenges exist in local as well as global markets. On of these challenges is to assess the degree of awareness in Islamic accounting theories. In their study, Gerrard and Cunningham (1997) reported that Muslim respondents, though aware of basic conditions in Islam, were almost wholly ignorant of the sense of specific Islamic financial conditions like Mudaraba, Musharaka and Ijara. As result, many Islamic financial providers seek to assess the level of social awareness of their tools that incorporate with Sharia. The understanding of customer degree of awareness are paramount important to determine firms endowment to promote Islamic accounting theories. Bankers also seek to explore the reasons behind dealing with Islamic banks to better understand and improve services provided. Another challenge that faces Islamic financial institutions is that, as service provided they have to understand customers perceptions and attitude toward the services provided to better understand customers need, want, and improve their services. With no understanding to customer perceptions and attitude Islamic banks may have no means to better develop their services and improve customer satisfaction and compete in the local as well as the international market. The current study seeks to assess the level of customers awareness of Islamic accounting theories and to explore their perceptions and attitude toward these tools that incorporate with Sharia. 1.3 OBJECTIVES OF THE STUDY Islamic financing is an important area of contemporary academic and policy interest. Opposing views in the area are analyzed in the light of empirical evidence. Measuring the degree of customer awareness toward Islamic accounting theory and their perception and attitude toward Islamic tools will shape the future of Islamic financing. The current study attempts to reveals the degree of customers awareness toward Islamic and efforts bestows to improve their awareness in order to assist Islamic financial institution to determine the efforts needed to raise this awareness and improve their attitude and perceptions. Another objective of this study is to explore customers perceptive and perception toward Islamic transactions thus Islamic financial institutions can better understand their customers and improve services provided. 1.4 SIGNIFICANCE OF THE STUDY Islamic banks provide many financial services and are competing heavily in the Middle East with conventional banks. Customers nowadays go for Islamic bank loans for buying home, cars and even business setup, as the conditions are very clear and there are no rising interest piling up. To overcome the fierce competition, Islamic bank need to bestow efforts in rising the degree of awareness toward Islamic accounting and finical tools and improve customers perception and attitude. The study is of general theoretical importance as well as of particular practical significance for policy makers who intend to conform their existing financial systems to Islamic rules. Furthermore, at the practical level, the study aims to assist Islamic bank manager in providing empirically evidence how of Kuwaiti customers aware toward Islamic accounting theory and Islamic financial services. The study also provide framework for bank managers in measuring customers perception and attitude toward Islamic services and their usage of various products and services offered. At the theoretical level, the current study aims to develop the literature of Islamic accounting theory and explain how these theories are to be implemented in the Islamic financial institution who adapts Sharia. 1.5 THE SETTING OF THE STUDY In the Gulf Co-operation Council there are growing number of Islamic banks are also taking steps towards greater clearness and stronger authority structures. The state of Kuwait for example, has been taking a number of steps to reinforce its local Sharia-obedient institutions, including slowly moving in the direction of a latest regulatory framework for sukuk. In conversations with OBG, manufacturing insiders explained that due to a lack of suitable legal mechanisms, Islamic finance companies are not allowed to issue sukuk in Kuwait, which forces Kuwaiti companies to work through other markets, such as Bahrain. Given the massive increase in sukuk issuance worldwide, pegged at nearly $17 billion (in the Gulf alone, the growth rate since 2001 has been nearly 45%), Kuwaits financiers are keenly aware of the need for proper rules regulating sukuk. Sheikh Salem Abdulaziz Al Sabah, the governor of the Central Bank of Kuwait (CBK), said earlier of 2008 that regulations are wanted, saying that the CBK is keen to provide a legal system to regulate Islamic investment tools such as the issuance of sukuk, especially in light of growing demand. We are optimistic a solution will soon be found. In state of Kuwait, the Islamic financial sector and its sharia-compliant companies are the increasingly global. Kuwait Finance house Bank (KFH), as an example, in addition to its Turkey, Malaysia and Bahrain ventures, newly established a subsidiary with a pair of Chinese firms to discover real estate investments in the Chongqing region of a middle China. In a more high-profile move, Investment Dar, one of Kuwaits biggest Islamic investment companies, recently funded a takeover of British luxury carmaker Aston Martin to the tune of $925 million. To achieve the purpose of the current study, the study focuses on a specific Islamic bank that located in the state of Kuwait. KFH has usually been one of the main engines behind the growth of Kuwaits sharia-acquiescent financial market; however, its enlargement and development indicates a growing maturity in Kuwaits sharia-compliant services zone, established by the push toward the regulation of Islamic bonds (sukuk) and the emergence of ever-stronger Islamic investment firms. KFH was the first Islamic bank in Kuwait and one of the pioneers toward adapting of Islamic accounting and financial theory in the gulf region. Beside the convenience, the research believe that exploring the degree of Islamic accounting theories of this bank may reveals highly reliable evidence of generalizing the finding in the state of Kuwait. KFH considered the main Islamic bank in Kuwait and the second-main bank of any kind in the country. Also to the huge injection of capital, KFH lately unveiled plans to set up its own subsidiary in Amman. The expansion of Islamic banks operations at home and overseas underlines the growing development of Kuwaits Islamic financial sector. Thus the study believe that investigating the customers awareness of Islamic banks toward Islamic accounting theory are justified and understanding their perception and attitude toward KFH is paramount important in attempting to improve service quality of Islamic firms. 1.6 LIMITATIONS OF THE STUDY This study is concerns with Islamic banking that located in the state of Kuwait as its difficult to include all Islamic banks related to resource limitation and time restriction. The study also does not analyze all Islamic accounting theory as it is very vast subject to control, rather than focusing on basic Islamic accounting theory that adopted by Islamic financial institutions and banks. Other limitation could be found related to: Sample size: The sample size for the bank customer is very large. Therefore, the collection of customer feedback will be costly in term of time and money. The study aims to attain around (150) survey for the purpose of analysis, which may considered one of the study limitation. Data collection: It may be difficult to distribute and collect all data and forms since the study is targeting to collect feedback from the entire bank customers. 1.7 DEFINITION OF TERMS The current study includes many Islamic terms and concepts that will be stated as in Arabic meaning, some of these concepts are: Halal: The actions or items that Muslims can have access to. Haram: The actions or items that Muslims are banned from Riba: What is known in the west as the interest. Maysir: It means Games of chance such as lottery, gambling and it is usually referred to as Haram. Takaful: It is a form of insurance in the Islamic religion which will be explained in the essay. Gharar: Deception, hazard, speculation, uncertainty, risk (literally, peril or hazard) Mudaraba: Is a trustee financing contract, where one party, the financier, entrusts funds to the other party, the entrepreneur, for undertaking an activity Mushakara: It is an equity participation contract, whereby two or more partners contribute with funds to carry out an investment Muqarada: Loan Participation Qard Hassan: It is a benevolent loan (interest free) Sharia: It is Islamic religious law derived from the Holy Quran and the Sunnah 1.8 THESIS STRUCTURE The current study includes five chapters: chapter one described the background of this study, and consisted of the introduction, objectives and significance of the research. Chapter two reviewed the literatures on Islamic banking and theories. Chapter three explained the research methodology. The data analysis techniques and research findings were demonstrated and discussions in chapter four. Finally, chapter five exhibited conclusions and future recommendation. CHAPTER TWO LITERATURE REVIEW Its necessary to explore the literature of Islamic accounting theory in details in this chapter. This chapter attempts to review previous literatures on the topic of Islamic Accounting Theory and provides recent finding related to the degree of awareness of customers toward Islamic financial services. This chapter attempts provide recent study and articles about Islamic accounting theory that explain the nature of Islamic banks system. Previous literatures and studies have revealed that the first recent research in Islamic banking filed was conducted in Egypt under cover, without projecting an Islamic picture, for fear of being seen as a demonstration of Islamic fundamentalism, which was abhorrence to the political government (Siddiqi l988). These studies remain until l967 where nine Islamic banks open in the country (Ready l98l). These banks was neither charging nor paying interest, investing mainly by participating in trade and industry, directly or in partnership with others, and shared the profits with their depositors (Siddiqi l988). For that reason, Islamic banks functioned basically as saving-investment firms rather than as commercial banks that based on charging interests. The Nasir Social Bank, established in Egypt in l97l, was declared an interest-free commercial bank, although its charter did not refer to Islam or Shariah (Islamic law). Islamic banks appeared on the earth scene as dynamic players over the past two decades. Nevertheless, a lot of the values that based on Islamic banking usually accepted all over the world, for centuries more willingly than decades. The essential principle of Islamic banking is the ban of Riba (interest), while the essential occupant of Islamic banking the prohibition of riba, a word that encompasses not only the perception of usury, but also that of interest has rarely been recognized as appropriate beyond the Islamic world, a lot of its guiding values have. The majority of these values are rooted in simple ethics and general sense, which form the bases of numerous religions, including Islam. Interest or â€Å"Usury† was forbidden in both the Old and New Testaments of the Bible, whereas Shakespeare and many other writers, mainly those writing in the 19th century, have attacked the barbarity of the carry out. Much of the ethics championed by Victorian writers such as Dickens ranging from the fair division of wealth through to mans elementary right to work is obviously present in contemporary Islamic society. Although the western media oftenrecommend that Islamic banking in its current form is a recent occurrence, in fact, the essential practices and principles date back to the early part of the seventh century. (Islamic Finance: A Euromoney Publication, 1997) It is obvious that Islamic finance was accomplished predominantly in the Muslim world during the Middle Ages, encouragement trade and business behavior. In Spain and the Mediterranean and Baltic States, Islamic trades became vital middlemen for trading actions. It is claimed that several concepts, techniques, and tools of Islamic finance were later adopted by European financiers and businessmen. As Islamic finance is intertwined within its religion, the basis of the religion affects the finance in two important ways: Islam aims at building a socio-economic order based on justice and considers economic activity as a means to an end and not an end in itself. It enjoins Muslims to harness natural resources, which are a trust from Allah SWT, for carrying out rightful activities; but abhors exploitation and man-made inequalities of income and wealth (Al-Harran, 1993). Islam is extremely concerned with the problem of financial growth, but treats this as an significant part of a wider problem, that of total human progress. The crucial function of Islam is to lead human growth on right lines and in the right direction. Islamic principle deals with all sides of economic development in the framework of total human development (Al-Harran, 1993). The reinforcement of Islamic banking coincided with the world-wide festivity of the advent of the 15th Century of Islamic calendar (Hijra) in 1976. At the same time financial assets of Muslims mostly those of the oil producing countries, expected a boost due to validation of the oil prices, which had up till now been under the power of foreign oil Corporations. These proceedings led Muslims to struggle to model their lives in agreement with the principles and philosophy of Islam (Abbas Valadkhani, 2004). Islam not only prohibits trade in interest but also in liquor, pork, gambling, pornography and anything else, which the Shariah (Islamic Law) deems Haram (unlawful). Islamic banking is an tool for the progress of an Islamic financial order. Some of the salient features of this order may be summed up as: Islam urges individuals to seek their economic well-being. Islam presents a clear difference between what is Halal (lawful) and what is haram (forbidden) in pursuit of such economic activity. In broad terms, Islam forbids all forms of economic activity, which are morally or socially injurious. This God rule can be considered as a way to systemize the citizens. Islam makes it obligatory on people to spend their wealth judiciously and not to hoard it, keep it idle or to squander it while acknowledging them their right to ownership of wealth legitimately acquired. This can be compared with the communism principles that look for the welfare of the whole members of the society. While allowing an individual to retain any extra capital, Islam look for reducing the edge of the extra for the well-being of the society as a whole, especially the poor and underprivileged sections of society by contribution in the procedure of Zakat. It is the way the Islamic government intervenes to ensure that poor people can have a formal financial source. While making payment for the ways of human nature and yet not yielding to the penalty of its worst propensities, Islam seeks to stop the amassing of wealth in a few hands to the damage of society as a whole, by its laws of inheritance. Viewed as a total, the financial system, which visualized by Islam aims at social justice without inhibiting people project beyond the point where it becomes not only jointly harmful but also individually self-destructive. The Islamic economic system employs the perception of contribution in the enterprise, utilizing the funds at threat on a profit-and- loss-distribution basis. This by no means implies that investments with economic institutions are necessarily tentative. This can be barred by careful investment strategy, diversification of risk and sensible management by Islamic economic institutions. This system supports people to invest their money in those financial institutions to exploit their utilities by making profits under the guidelines of the Shariah. The concept of profit-and-loss sharing, as a basis of financial transactions is a progressive one as it distinguishes good performance from the bad and minimize the players in the market to be the people who know how to invest and when they inter the market to catch the goal. The main goals of an Islamic Banking and Financial system are to: Implement the value system of the Quran and the Sunnah (tradition or practice of Prophet MuhammadSAW) in the realm of the Muslim socio-economic system. Ibn Taymiyahr.a. (n.d.), a distinguished scholar of Islam, explicates this as follows: â€Å"In muamalat (business transactions) all activities are permissible unless forbidden by revelation (Quran) or the practice of Prophet Muhammad SAW†. The examples of prohibited business activities would include dealing in gambling, liquor, pork etc. The financial contracts of Islamic banks need to be clearly documented, equitable and avoid the elements of Riba, Gharar and Maysir as explained in the following section. Foster the growth of the economy of Muslim nations by developing financial markets, institutions and instruments. A well-developed capital market, with efficient institutions offering diverse financial facilities, can reduce the overall cost of capital. It can enhance social welfare by facilitating the acceptance of projects whose; present value of all relevant cash in-flows (benefits) after tax is greater than the present value of all cash out-flows (cost) of the project; or the expected internal rate of return is greater than a minimum threshold rate (or cost of capital). Furthermore, these necessary conditions should also be satisfied for each party financing the project to alleviate agency effects. This entails economic development, which is promoted in Islam, as Prophet Muhammad SAW exhorted Muslims to undertake business ventures (tijarah) as described in the following hadith Nuaym ibn Abd Al-Rahman has quoted the (narration). ProphetSAW as saying: â€Å"Nine tenths of earnings (Rizq) is in bai (business ventures), and tenth in cattle†. This was reported by Ibrahim Al-Harbi (Al-Iraqi, 1992) and by Said ibn Mansur (Al-Suyuti, 1990). Dampen the shocks of extreme economic output by promoting risk-sharing instruments whose payoffs are strictly contingent on the profitability of a firm or project at a micro level. Financial facilities with fixed costs can severely strain the resources of borrowers during a slowdown, which lead to bankruptcies and structural impairment of the economy. The gist of Islamic financial securitization is summarized by the following well-known hadith quoted by Kahf and Khan (1992), â€Å"Al-kharaj bi al daman.† This implies that entitlement of return from assets vests in the one bearing the risk of it. 2.1 CONVENTIONAL BANKING The main job for most of non-Muslim or conventional banks is preserved money and valuables and give loans, credit, and imbursement services, for example checking accounts, money orders, and cashiers checks. These banks furthermore may propose investment and insurance products, which they were once banned from selling. As a diversity of models for collaboration and integration amongst finance industries have appeared, some of the conventional distinctions among banks, insurance companies, and securities firms have reduced. Regardless of these changes, banks continue to preserve and carry out their main role—allowing deposits and lending funds from these deposits. There are several kinds of banks, which vary in the number of services they offer and the customers they serve. Although some of the distinctions among these kinds of banks have tapering as they begin to enlarge the vary of products and services they propose, there are still key distinctive behaviors. Commercial banks, which control this industry, provide a full variety of services for customers, enterprise, and governments. These banks come in a broad range of sizes, from large international banks to local and community banks. International banks are involved in global lending and foreign cash trading, additionally to the more typical banking services. However, a lot of commercial banks have also extended to present online banking, and some previously Internet-only banks are opting to release branches. Savings banks and savings and loan associations, occasionally called thrift institutions, are the second biggest group of depository institutions. They were first recognized as community-based firms to finance mortgages for people to purchase homes and still cater mostly to the savings and lending requirements of individuals. Credit unions are another type of depository institution. Most credit unions are created by people with a familiar bond, for instance those who work for the similar company or be a member of the same labor union or church. Members pond their savings and, when they require money, they may borrow from the credit union, frequently at a minor interest rate than that demanded by other financial institutions. Federal preserve banks are Government agencies that achieve numerous financial services for the Government. Their chief tasks are to control the banking industry and to aid implement our Nations financial policy so our economy can run more proficiently by directing the Nations money provide—the total amount of money in the country, including cash and bank deposits. Interest on loans is the main source of income for most banks, making their diverse lending departments critical to their achievement. The commercial lending department loans money to companies to start or enlarge a business or to buy inventory and capital tools. The customer lending department handles student loans, credit cards, and loans for home developments, debt consolidation, and automobile purchases. Finally, the mortgage lending department loans money to individuals and businesses to buy real estate. The money to loan comes mainly from deposits in checking and reserving accounts, certificates of deposit, money market accounts, and other deposit accounts that clients and businesses arrangement with the bank. These deposits often make interest for the owner, and accounts that offer checking supply an easy technique for creation payments safely without using cash. Technology is having a main impact on the banking industry. such as, many usual bank services that once needed a teller, for example making a withdrawal or deposit, are now existing through ATMs that let people to right of entry their accounts 24 hours a day. In addition, direct deposit permits companies and governments to electronically transfer payments into different accounts. Also, debit cards, which may also apply as ATM cards, immediately deduct money from an account when the card is swiped across a machine at a stores cash register. Electronic banking by phone or computer permits consumers to pay invoices and shift money from one account to another. Through these channels, bank customers can too admission information such as account balances and statement history. Some banks have started offering online account aggregation, which makes accessible in one place detailed and up-to date information on a clients accounts held at diverse institutions. Progressions in technology have also led to upgrading in the ways in which banks process information. Use of check imaging, which lets banks to store photographed checks on the computer, is one such example that has been applied by some banks. Other kinds of technology have deeply impacted the lending side of banking. such as, the availability and increasing use of credit scoring software lets loans to be accepted in minutes, rather than days, making lending departments more competent. Other basic changes are taking place in the industry as banks vary their services to become more competitive. A lot of banks at the present offer their clients financial planning and asset management services, as well as brokerage and insurance services, frequently throughout a subsidiary or third party. Others are starting to offer investment banking services that assist companies and governments increase money during the issuance of stocks and bonds, also usually during a subsidiary. As banks reply to deregulation and as competition in this sector raises, the nature of the banking industry will continue to undertake considerable change. 2.2 COMPETITIVENESS OF THE ISLAMIC BANKING INDUSTRY The crucial feature of Islamic banking is that it is interest-free. Although it is frequently claimed that there is more to Islamic banking, for example contributions towards a more fair distribution of income and wealth, and improved equity contribution in the economy (Chapra l982), it nevertheless obtains its specific rationale from the fact that there is no place for the institution of interest in the Islamic order. Islam forbids Muslims from taking or giving interest (riba) in spite of of the reason for which such loans are made and despite of the rates at which interest is exciting. To be certain, there have been efforts to differentiate between usury and interest and between loans for consumption and for production. It has also been argued that riba refers to usury accomplished by minor money-lenders and not to interest charged by contemporary banks and that no riba is occupied when interest is compulsory on productive loans, but these arguments have not won approval. Apart from a few disagreeing opinions, he general agreement among Muslim scholars obviously is that there is no variation between riba and interest. In what follows, these two terms are used interchangeably. The forbidden of riba is mentioned in four different revelations in the Quran. The first revelation highlights that interest removes wealth of Gods blessings. The second revelation condemns it, placing interest in combination with illegal appropriation of property belonging to others. The third revelation enjoins Muslims to keep on clear of interest for the sake of their own welfare. The fourth revelation set up a clear difference between interest and trade, influencing Muslims to take only the principal sum and to forgo even this sum if the borrower is not capable to repay. It is further declared in the Quran that those who ignored the forbidden of interest are at war with God and His Prophet. The forbidden of interest is furthermore cited in no unsure terms in the Hadith (sayings of the Prophet). The Prophet warned not only those who take interest but also those who offer interest and those who record or witness the operation, saying that they are all similar in guilt. It may be mentioned in passing that similar prohibition are to be found in the pre-Quranic scriptures, although the People of the Book, as the Quran refers to them, had chosen to rationalize them. It is remarkable that Islam has successfully warded off various subsequent rationalization efforts aimed at legitimizing the institution of interest. Some scholars relays on economic reasons to explain the reasons on why interest is prohibited in Islam. scholars argued that interest is a pre- determined cost of production, which avoid full employment (Khan l968; Ahmad n.d.; Mannan l970). In the same tone, it has been challenged that international monetary crises are largely due to the institution of interest (Khan, n.d), and that trade cycles are in no small measure attributable to the phenomenon of interest (Ahmad l952; Suud n.d.). None of these studies, however, has really succeeded in creating a causal link between interest, on the one hand, and employment and trade cycles, on the other. Others, anxious to maintain the Islamic position on interest, have argued that interest is not very effective as a monetary policy instrument even in capitalist economies and have questioned the efficiency of the rate of interest as a determinant of saving and investment (Ariff l982). A general line running through all these negotiations is the exploitative character of the institution of interest, although some have pointed out that profit (which is legalized in Islam) can also be exploitative. One response to this is that one must differentiate between profit and profiteering, and Islam has prohibited the latter as well. It began as a theological dream, but Islamic banking has become a practical reality across the Middle East. The question now is, how far will Sharia boards and western regulators let it spread? (Josh Martin, Middle East, Jun2005 Issue 357, p50, 6p) The Islamic prohibition on interest does not imply that capital is costless in an Islamic system. Islam realizes that money is a factor of production however; it does not permit the factor to pre-determined claim on the productive surplus in the form of interest. This has leaded to the question as to what will then substitute the interest rate mechanism in an Islamic framework. There have been propositions that profit sharing can be a viable alternative (Ka