Multiculturalism Theory

The research is based on two major theories: Multiculturalism theory and Islamic banking theory.
Multiculturalism theory, as a part of political philosophy focuses on appropriate understanding and responding to issues derived from cultural and religious diversity. Scholars recognize the existence of barriers that minorities are struggling with in order to pursuit their social practices (Song, 2017, para.1-2). Song (2010), suggests that a proper response is to tackle cultural diversity with group-differentiated rights and accommodations (p.1). This can be achieved by implementing normative considerations in a form of various multicultural policies, which aim to provide cultural accommodation for diversified minorities (Vitikainen, 2017, para.1).
Islam does not distinguish between sacred and secular; all aspects of life must comply with the divine law of Islam - the Shari'ah law. Unified jurisdiction is affecting all aspects of life, including social, religious, economic or political affairs, therefore, values of solidarity and fairness should be inscribed in financial and entrepreneurial activities, applicable in both private and public realms (Lewis & Iqbal, 2009, pp. 20-21; Khan & Porzio, 2010, p. 6; Hanif, 2014, p.4-6). Islamic banking was primarily designed to meet demands of Muslim population and to provide Shari’ah compliant solutions to replace questionable practices of conventional banks. However, Islamic financial services are not solely focusing only on this target group (Hanif, 2014, pp. 3-4; Ibrahim, 2015, para. 2). In fact, scholars suggest that regarding transaction outcomes, there are no significant differences between conventional and Islamic banks; the systems vary in their philosophy and the process of transactions due to imposed restrictions by Islamic law (Hanif, 2014, pp. 3-18, Ibrahim, 2015, para. 6; Abedifar, Ebrahim, Molyneux & Tarazi, 2015,
These differences are observable in both cases of deposits and financing. The most significant difference regarding deposits is in the nature of rewards. Under conventional system, the reward is agreed upon in advance and fixed, whereas Islamic reward can vary. Moreover, in contrast with its conventional counterpart, both, risk and the subsequent reward are shared with depositors. Western banks bear all the risk, as well as they receive the whole reward (Hanif, 2014, p.11). Although both institutions are providing financing; Islamic banks are allowed to issue only interest free loans. These banks can however, receive profit on investments by providing required assets to clients. These conditions are significantly influencing ability and the way how banks operate in all areas of financing, including overdrafts, short-term, medium & long-term loans, leasing, agricultural loans, house financing and investments (Hanif, 2014, pp. 12 -