Parallels and tensions among Christian and Islamic banking

Abstract

Over recent decades, Islamic banking has experienced substantial global growth, with assets under management reaching approximately USD 3.24 trillion, while the Christian community has not developed a comparably operationalised banking paradigm. This study examined the parallels and tensions between Christian and Islamic banking, both grounded in deontological ethics derived from Abrahamic traditions, to assess whether Christian banking could serve as an independent, ethically driven framework alongside Islamic banking. The objective was to determine whether Christian banking, as articulated within the Reformed tradition, represented a distinct model in its approach to areas of engagement, charging interest, and applying risk management, or whether alignment with the established Islamic paradigm would suffice. The scope of the study included doctrinal, historical, and practical considerations, with emphasis on their respective ethical underpinnings. A comparative theological-ethical methodology was employed, drawing on primary religious texts, doctrinal interpretations, and relevant secondary literature. Historical development and contemporary practice were reviewed for each paradigm. Three thematic domains were examined in detail: (1) the determination of permissible areas of engagement; (2) the ethical treatment of interest; and (3) the moral framing of risk-taking. The findings revealed that Islamic banking applied a negation-based framework, grounded in Sharia, which prohibits specified economic activities and the charging of interest [riba], while promoting risk-sharing partnerships and restricting speculative practices under the principle of gharar. In contrast, Christian banking adopted a constructive, Christ-imitating ethos that encouraged proactive societal participation, permitted interest within equitable bounds, and endorsed responsible risk-taking as part of stewardship obligations. Both paradigms emphasise social responsibility, ethical integrity, and the protection of weaker stakeholders, thus diverging significantly from secular ESG models. The study concluded that, despite shared ethical origins, the paradigms diverged substantially in structure and application. Islamic banking’s prescriptive restrictions provide operational clarity but limit market flexibility. Christian banking’s constructive approach requires greater practitioner discretion yet allowed broader participation in global markets using accepted interest-bearing products and calculated risk-taking. Consequently, Christian banking appears potentially more adaptable to diverse economic contexts while maintaining its ethical commitments.
Contributions: This research contributed to the field of ethical finance by providing the first comprehensive comparative analysis of Christian and Islamic banking paradigms from a deontological perspective. It demonstrated that Christian banking constitutes a distinct, independent model with unique theological and operational foundations, offering an alternative ethical framework capable of enriching global faith-based finance.