islamic economic renaissance 367Naggar tells us about the Mit-Ghamre Bank in the upper Egypt’s
village of Mit-Ghamre where he introduced the idea of Islamic bank-
ing wrapped, as he is telling us, in a not particularly Islamic slogan.
Savings Banks were a successful endeavour for a decade or so until
the government moved in and put the bank under government super-
vision and regulations (Al-Naggar, 1973, 1976). The Nasser Social
Bank, the state institution that took over the Mit-Ghamre Bank, is
still operating in Egypt. It has a particular social function: collecting
and distributing Zakàh and providing social loans to those in needs.
The two decades or so after the beginning of writing on, and indeed
the establishment of, Islamic banks, witnessed distinct focuses in the
literature on Islamic banking. Ariff provides us with an interesting
survey of these studies from the early stage during the mid nineteen
sixties to the late nineteen eighties when contributions to the subject
attracted much attention (Ariff, 1988). Even with different emphasis
and various degrees of elaboration, there was unanimous agreement
among Islamic economists that Islamic banking operations should be
based on the PLS (profit and loss sharing) principle instead of on
the basis of interest. Despite the abundant theoretical work on Islamic
banking up to the end of the twentieth century, empirical work on
the operation of Islamic banks seemed to be very limited. Some case
studies have been conducted in Bangladesh, Egypt, Malaysia, Pakistan
and Sudan (ibid.) but the number of studies is still small. From field
studies it is evident that there are similarities and differences in the
application of the PLS principle to Islamic banks in these different
countries. For example, the Islamic bank of Bangladesh has been
offering PLS Deposit Accounts, PLS Special Notice Deposit Accounts,
and PLS Term Deposit Accounts, while Bank Islam Malaysia has
been operating two kinds of investment deposits, one for the gen-
eral public and the other for institutional clients (ibid.). The studies
also show that the profit sharing ratios and methods of payment vary
from place to place and from time to time. For example, profits are
provisionally declared on a monthly basis in Malaysia, on a quar-
terly basis in Egypt, on a half-yearly basis in Bangladesh and Pakistan,
and on an annual basis in the Sudan (ibid.).
Furthermore, to add to the problem of operational technicality,
Islamic banks do not have a yardstick against which profit ratios are
measured in Murabaha operations or otherwise except for LIBOR,
or similar. It is well known that LIBOR is based on interest rates
and when Murabaha operations are based on such a yardstick they