Islamic Finance - Islamic commercial and investment banking
When commercial banks were initially conceived of as serving the retail economy, merchant banks started out working with wholesale enterprises. These banks have historically provided services for financial transactions involving financing sums that are too large for conventional banks to handle. Thus, their area of expertise was restricted to tasks like bond issuance and syndication. They grew their companies over time to offer advice and underwriting services. Their fee-based activities expanded, pushing deposit taking and loan making—despite their substantial volume—to the background. However, the current fad is for commercial banks to evolve into investment banks. Because the banks are permitted to offer more goods, such as asset management and structured products, investment banking is a more expansive variant of merchant banking. Islamic merchant or investment banks specialize in setting up financing that complies with Shari'ah and providing advice services that complies with Shari'ah. Islamic securities, Islamic asset-backed securitization, Islamic structured finance, Islamic financing syndications, and other fee-based activities utilizing recognized Islamic principles like Murabahah, Ijarah, Istisna', and Kafalah are some of the more consumer-focused products they arrange or offer advice on.
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