Islamic banking

Résumé du document

Islamic banking is both a new worldwide phenomenon and a very old school of thought. Its origin may be traced back to the Middle East, but due to the fast development of Asian countries with a majority of Muslims (like Malaysia), this trend is becoming global. It is a growing force with whom it is impossible not to take it into account the globalization process. The only definition of Islamic banking is the development of banking or banking activities ruled by principles in compliance with the Islamic principles (Sharia). Here, finishes the definition. In the current credit crunch context, Islamic banking seems to be an alternative to conventional banking for two main reasons: Interest fees are prohibited by the Sharia, and Riba which means excess, addition is prohibited. Nowadays, Riba is supposed to have ruled the global finance worldwide for decades, so Islamic banking appears as the White Angel, that even conventional banks are trying to insert themselves in the process! Nevertheless, in what measure Islamic banking may represent an alternative to conventional banking?

Extraits

[...] Is Islamic Banking really a solution? Regarding the current economic situation, the Islamic banking may be an alternative to the failure of conventional banking. Since it represents a huge market! The studies are edifying: According to Arabnews.com, the Islamic banking industry is set to achieve an estimated 20% growth annually and McKinsey & Co has forecasted the sector to reach trillion in assets by 2010. Also its potentiality is so important that an increasing number of departments specialized in Islamic banking, which are in compliance with Sharia'h's recommendations, have been created as well in Asia than in the USA. [...]

[...] Introduction Islamic banking is both a new worldwide phenomenon and a very old school of though. Its origin may be trace back to Middle Est (first one: a savings bank based on profit-sharing in the Egyptian town of Mit Ghamr in 1963 ) but due to the fast development of Asian countries with a majority of Muslims (like Malaysia), this trend is becoming global. It is a growing force with whom it is impossible not to take it into account in the globalization process. [...]

[...] The more restrictive countries have a huge power on the Banks concerning regulation. The current financial instruments are not efficient enough to generate the liquidities needed for the development. At the point it is difficult to launch this kind of department in conventional bank or simply Islamic Banking and the complexity of such banking process makes the people reluctant to take part in the project. All the more so it is not possible to speak about one Islamic Banking industry and even if the potential of growth is unbelievable, it is not for tomorrow morning! [...]

[...] Islam is plural and is always subjected to interpretation. Islam is a matter of men, Imams and schools of though. Thus the Sahria'h interpretation may vary from a country to another. For instance the interest fees are tolerate in Malaysia whereas there are completely forbidden in Middle East countries. Here, the only changing thing is the Sharia'h interpretation: in Malaysia fees are allowed if it there are not very high: the average return on loans seems to be a little more than 10 percent but it is not so high for the country. [...]

[...] The main principles of the Islamic Banking: a solution to the failure of the Conventional Banking? Before all, to understand what Islamic Banking really is, one has to define its main modern principles. The basic principle is the sharing of profit and loss and the ban of interest fees. To simplify, an Islamic bank is not allowed to borrow money to an individual so as to he would be able to buy his own house. The bank must buy the house and then sell it to the individual! [...]