The introduction of Islamic banking in France: A research on the potential market for retail Islamic banking

Thèmes abordés

islam, finance islamique, anglais, banque, banque islamique, finance, politique

Résumé du document

This study provides an assessment on the current problems and progresses made in France for the introduction of Islamic banking into its economy and contains an evaluation and an analysis of the potential market for Islamic retail banks in France.

The research is divided into two distinct parts; a secondary research exposing the opportunities and the barriers for the implementation of Islamic banking in France and a primary research aiming to assess and analyze the market for such a banking system through questionnaire administration. The secondary research is concluded by a SWOT analysis (Strengths Weaknesses Opportunities and Threats) on the current situation of Islamic banking in France with the help of statistical tools used for analyzing the primary research. Analysis includes descriptive analysis, cross tabulations, correlation as well as variance analysis.

Results of the secondary research shows that France has real trumps to welcome Islamic banking into its territory and few feasible amendments are still necessary to accelerate the process. Results of primary research showed that the Muslim population responded positively to a possible opening of an Islamic bank in France. As argued in the literature review, they represent an opportunity for the introduction of Islamic banking in the country.

It also appears that Muslims use conventional banking because they lack choice and even if they did they would have chosen Islamic financing if possible. Finally, analysis of variance demonstrates that there is no link between age, sex, profession and the attitude towards Islamic banking and also there is no link between the practices of religion.

Thus, the study finds that there are trumps and a huge potential market for facilitating the introduction of Islamic banking in France. However, the amendments process has to be accelerated to optimize the success of its implementation. Also, empirical studies on the topic should be multiplied so as to encourage Islamic entities to establish in France when it will be possible.

The study also considered that the analysis conducted is not without limitations. Some of them include the fact that the thinking of the participants could not be investigated further through questionnaires; some classes are more represented than others (18-25 years range is overrepresented compared to people 40+); forecast figures are not provided; and it is not possible to assess the sincerity of the participants.

Islamic finance and more precisely Islamic banking have recently been put in the spotlight amongst the financial activities and are subject to growing interest all over the world. This new trend is partly due to is exponential growth and to the optimistic forecasts being made on those financial activities. Hence, shari'a compliant asset is estimated to have reached $951 billion at end-2008 by the IFSL Research (2010 a) which is 25% more than end-2007. Commercial and investment banks hold the most shari'a compliant assets.

Moreover, Islamic finance is predicted to reach $4,000 billion in the future. This forecast makes it even more attractive. However, despite the figures above, Islamic banking activities are still concentrated in Muslim countries such as the Gulf Cooperation Council countries, Iran, and Malaysia. Amongst Western countries, only the United Kingdom made a big move by amending its legislation to make easier the creation of the first standalone Islamic retail bank in the Western world in September 2004 (Islamic Bank of Britain 2010). With the political willingness, double tax on Islamic mortgage was removed in 2003 and tax relief on Islamic mortgage for companies was extended to individuals too.

Tags: Islamic banking, sharia law, retail Islamic banking in France

Extraits

[...] I am not convinced that Islamic banking is halal 5. Other 20 Finally, when buying an asset (home, car etc.), which financing method do you give preference to? 1. The cheapest 2. The most compatible with Islam 3. Other Appendix II: DJ Islamic Market Titans 100 Index structure as of 14 December 2009 Source: BNP Paribas (2009) Appendix III: European Council for Fatwa and Research's Resolution on "Permissibility of conventional mortgage under necessity" Fourth Ordinary Session [October 27-31, 1999] Resolution 2/4 Purchasing houses with an usurious loan for Muslims living in non-Muslim countries, i.e. [...]

[...] Administration of questionnaires 4. Sampling 5. Justification for method chosen 6. Critics of method chosen 7. Objectives 4. Ethical Consideration 1. Secondary research Outcome of the research 1. Opportunities for introduction of Islamic banking in France 2. Barriers for introduction of Islamic finance in France 2. [...]

[...] The results are clearly showing that amongst Muslim people living in France only a few of them are owner of their accommodation This is a clear indication that Muslim people willing to buy an accommodation represent a real market for Islamic banks in France. But in order to make sure that the non ownership of accommodation is not due to unwillingness but to extra-raisons, the following question had been asked: The outcomes are clear: of the Muslim population, who is not owner, wish to be owner of their accommodation. [...]

[...] In addition to the expertise and experience of its banking institutions, France also got knowledgeable and experimented people in this area. Since 2008, Islamic finance Master course are available in major French cities (Paris, Lille, Strasbourg Therefore it can be argued that experiment institutions and skilled people are ready to undertake the challenge of Islamic banking in France. Support of key players As argued in the literature review there is a veritable volition of the key player to make easier the introduction of Islamic banking in France. [...]

[...] That is why I need to assess the potential market for this kind of new banking system if it has to be introduced in France. Why have you been chosen? You have been chosen because you live permanently in France, you are above 18 and you are Muslim Do you have to take part? You are not forced to take part to this research as responding to the questionnaires is purely optional for you. If you wish to withdraw you can do so at anytime What do you have to do? [...]