Islamic banking is a financial system that operates according to the principles of Islamic law (Sharia), which emphasizes ethical, socially responsible, and interest-free banking. The system contrasts with conventional banking, which is fundamentally capitalistic, profit-driven, and interest-based. This article explores the theoretical underpinnings, operational mechanisms, and the socio-economic implications of Islamic banking in the context of global capitalism. It delves into how Islamic banking interacts with, complements, or challenges the conventional capitalist financial systems. Theoretical Framework Islamic Economic Principles Islamic banking is grounded in the broader Islamic economic framework, which seeks to balance material and spiritual well-being. The key principles include: Prohibition of Riba (Interest): Riba, or the charging of interest on loans, is strictly prohibited in Islam. This principle is based on the belief that money itself should not generate more money wit...