Islamic finance is financial activity that is consistent with the principles of Shariah and its practical application through the development of Islamic financial products. For example, Shariah prohibits the fixed or floating payment or acceptance of specific interest or fees (known as riba, or usury) for loans of money. Investing in businesses that provide goods or services considered contrary to Islamic principles is also haraam ("sinful and prohibited").
Although these principles have been applied in varying degrees by historical Islamic economies due to lack of Islamic practice, only in the late 20th century were a number of Islamic banks formed to apply these principles to private or semi-private commercial institutions within the Muslim community. Research in this area is concerned with the history of Islamic financial institutions and application and performance of Islamic finance structures in a modern economic environment. In particular, it studies how social norms imbedded in Islamic tradition interact with conventional capital markets and affect the performance of economic and financial institutions.