Question

A major distinction between a conventional bank and an Islamic bank is that Islamic banks __ are allowed to charge higher interest on loans. cannot accept private deposits. cannot pay or charge interest. are not subject to any form of law,

Answer 1

cannot pay or charge interest.

Step-by-step explanation:

Islamic banks are banks that are based on Islamic laws or Sharia laws which is found in the Qur'an.

In Islamic banking, all banking transactions must be compliant with the Sharia laws.

Islamic banks differ from conventional banks in that :

1. they prohibit usury : Usury is charging interest on loans

2. they prohibit all forms of speculation : Islamic laws prohibit all forms of gambling

3. Investments in items that are not allowed in the Qur'an e.g. alcohol

Islamic bank use equity participation to make money. When an Islamic bank lends money to a business, instead of charging interest on the loan, the receive equity in that business and are entitled to a part of the company's shares