Islamic finance emerged in the post-colonial period through the search to developan authentic Muslim identity in response to economic and financial matters. Sincethe late 1950s, modern Muslim economists (as academics) have been involved indeveloping an Islamic economic paradigm through the proposal of an alternativeIslamic system understanding with its foundational principles, institutions, workingmechanisms, and economic and financial instruments. By the 1970s, it was clearthat despite having Muslim states, the move into such a new paradigm was notpossible due to lack of political will in these countries. Consequently, the moraleconomy approach based normative Islamic economics had to be dismissed dueto the adverse political conditions. The underdeveloped nature of theoretical andpractical knowledge of Islamic economics also played a role in negating the discourseto developed an economic system of Islam. However, in an attempt to sustain the‘dream’, the efforts of social agents such as Muslim academics, economists, bankersand technocrats resulted in Islamic banking as the new institutional formation in1975 in the form of a commercial Islamic bank based on the earlier Islamic financialexperiences including the short lived Mith Ghamr (Islamic) social bank experiencein early 1960s in Egypt and Tabung Haji social (Islamic) investment institution in
