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I can’t see a reason for it being non-profit. Every bank runs and invests in stocks and other forms of deals, they have to make their money somehow!!
Islamic banks, for example, when giving a mortgage, they ask how much you need, they then see what house you are buying, that house is £500k, they buy that house, and then sell it to you for £550k (this is an example)… this is how they make their profit.
Besides, how would they pay their staff or anyone else that works for them and all their hard work. Bankers get a lot of money and for banks to function they have to provide services that in turn will do a lot for the public, and for this to be possible, they must be making a profit.
Do you think I am missing anything?
I agree that they shouldn’t have to be not for profit, and in the current climate I don’t think it’s possible for them to even practically operate without being for profit, expenses wise
That said I believe that in an ideal Islamic setup, banks would be a service for the people offered by the Islamic government and thus could be viably not for profit
Because I believe the for profit nature of banks introduces a conflict of interests to a certain extent
Most Islamic banks use the funds under management for Islamic mortgages.
Some of them as charge fees for using the bank.
Yhhh this is the only way for the banks to be a non profit, if the government gets involved, which I don’t see happening in any way tbhh
Yh I see this as their main source of making more money! The rest is very small except stocks and stuff they invest in.
Yeah agreed. I was speaking in more of an ideal Islamic setup which practically we don’t have right now unfortunately
Tbh if banks are actually able to invest peoples money then they alone I imagine could be enough to meet a lot of the costs of them offering their services. I think the issue with this model alone would be liquidity though - people would want there money out and the bank would need to prior optimise for balancing between liquidity and profitability
I second that. The statement seems a bit odd
Not sure I agree- ideally there should be an incentive for all parties I think
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can you elaborate? Would love to hear your ideas on it.
Yes- I think if there’s an inherent incentive imbedded within the system (toward the right goal) the system itself will function well
Currently the system is one where banks benefit if customers miss their credit card payments as they can then charge them significant fees
Whereas if Islamic banks have a positive goal in mind but there isn’t a financial incentive, I think they would require external intervention and it is less likely to be self sustaining
Tbh it doesn’t make sense for a bank to non-profit, it won’t be able to offer the large scale services that conventional banks offer