"A nominal zero interest rate, according to Friedman, is a requirement for the best distribution of resources. By examining general equilibrium models, it was discovered that zero interest rates are both necessary and sufficient for allocative efficiency".
Interest Free Banking is based on the Islamic Shariah's "Fiqhul-Muamalaat" doctrine. There are two main tenets: the first is that parties should split profits and losses; the second prohibits lenders and investors from engaging in the collection and payment of interest. The "Riba" of interest collection is expressly forbidden under Shariah. Additionally, "investments in pork, gambling, entertainment, and other banned goods are severely prohibited. In 51 nations, including the United States and the United Kingdom, there were more than 500 Islamic Banks".
Thus, IFB was developed to meet customer demand for banking services that complied with Shariah regulations. Islamic thought views "Interest Free Bank as a Halaal alternative that would protect the interests of the servants from harms associated with Haraam that is prohibited by the Almighty saying (God has permitted the sale and prohibited usury)" Quran: 2:75. The fundamental justification for the ban on interest is that it is oppressive and unfair. Rich people who can lend can also charge interest on those loans, allowing them to amass wealth at the expense of those who are in need of it.
The Islamic Financial System was reportedly standing on solid ground, particularly in the aftermath of the 2008 financial crisis due to the presence of financial institutions in numerous nations. Currently, the UAE, Saudi Arabia, Bahrain, Britain, Malaysia, and Singapore are vying with one another to establish themselves as the world's leading centres for IFB. The Islamic finance sector has now begun to grow outside of the major Muslim nations, transcending national boundaries and religious restrictions. This industry has experienced tremendous expansion in Europe, the "United Kingdom", "Australia", "Hong Kong", "Korea", and the "United States".
