Islamic finance services and their application to the Italian financial system

The Islamic financial system is taking on an increasingly significant role in the International scene and is becoming a model which could constitute a valid alternative to our traditional financial system. At the base of this alternative system is the Sharia, that body of religious, ethical and moral norms which make up the Islamic religion and which govern the life of its followers in all its aspects, from the most private and personal to the social sphere, including economic and commercial issues. These norms are embodied in various concrete precepts, the most characteristic of which is surely the prohibition of riba, that is, of interest: the creation of money from money is in fact forbidden as it is considered a kind of usury (hence the expression riba: “interest usury”).The Islamic services therefore assume very different connotations from those to which we are accustomed: the applicant for a loan and the bank find themselves mutually involved in the results of the investment in a type of profit and loss sharing which is comparable to the functioning of a limited liability company. From these assumptions derives a series of Islamic contracts which focus on these very prerogatives and which create what is essentially a partnership between debtor and bank. The aim of this paper is to analyze the services offered by an Islamic financial institution and verify their compatibility with existing financial instruments provided by traditional banks in the Italian context.