Comparison between Islamic and Conventional BanksIntroductionThe rapid growth of Islamic financial institutions across borders and continents testifies to the dynamic nature of the Islamic banking system. It is based on Shariah-compliant financial and business principles. These practices are rooted in the fundamental philosophy of Islamic banking and finance, firmly grounded in the Quran and Sunnah, transcending religious rituals and now widely accepted as a substitute for the established banking system. In particular, Islamic banking offers an attractive alternative to conventional debt financing, as the morality of the conventional method has begun to be questioned (Hasan KM, Kayed NR and Oseni AU 2003: chapter 1). A main feature of Islamic finance is particularly where it ensures that the financial needs of Muslims are justly met by emphasizing risk sharing rather than risk transfer to the weaker party. This research paper aims to highlight the parallels, and even disparities, between the assets and liabilities of an Islamic society and an Islamic society. conservative banking.Literature reviewMethodologyStudy - Comparison of systems between Islamic and conventional banksThe Islamic financial system is not limited to banks only, but also extends to financial instruments, financial markets and all other types of financial mediation, all of whom must adhere to the principles of Islam. Contracts of “Islamic banks” or “Islamic financial institutions” respect Islamic legal requirements as well as those of the State (El-Gamal, MA 2000: Chapter 2). According to Islamic law, the three main things that have been forbidden are Riba, Gharar and Maysir. While the Quran...... middle of paper ......on the offerings of Islamic banks and conventional banks. For example, demand deposits and leasing contracts still carry a high level of risk when sharing with Islamic banks. Transaction costs and agency issues between savers and entrepreneurs are the augmentation of banks because banks can help save transaction costs and also mitigate agency conflicts. The agency problems faced by banks arise from both sides of the balance sheet where they invest money in loans and other assets from depositors and also where the bank has to act effectively as an agent depositors, and on the asset side, where borrowers use the resources provided by depositors for the purpose of investment. The debt contract