Islamic Banking in Saudi Arabia - Essay Example

How ill Islamic banking be promoted not just in Saudi Arabia but in all parts of the world, and presents to them that it is the new representation of the banking sector? 2. The question is the most obvious yet the least question sought by answer because despite of myriad studies on how Islamic banks exceeded conventional banks, the financial system is still in favour with its counterparts and results are not taken seriously. The significance count on the consideration that a big percentage of the world’s population are Muslims and Islam is the third largest religion. 3. Dissertation Plan: In the introduction, I am going to write 1000 words in which I am going to define my terms and points that I am going to make in the essay in a logical and linked fashion. Then it will be followed by a literature review of 5000 words to extend the direction of my topic either in theoretical, methodical, or analytical manner pertaining to the promotion of Islamic banking. I am going to write 5000 words in the research stage for primary and a secondary research of published studies and reports. The data collection will be followed by an analysis and discussion for 2500 words in which I am going to establish an understanding of the data and say what it means. The final stage of the plan is the concluding chapter (1000 words) in which I am going to answer all raised questions and draw all the details together into a whole. The last is the 500 words recommendation based on my analysis that includes the steps that should be done, needed resources, and feasibility of the proposal. Action Plan: 1. The principles of Islamic banking can be fully promoted among Muslims and non-Muslims by investing heavily on academic discipline, and research and development (R&D). The Islamic Foundation in UK had established the Markfield Institute of Higher Education (MIHE) just like the Islamic Financial Services Programs (IFSPS) in Australia, and Islamic Finance Professional Certificate (IFPC) in Malaysia. 2. Encourage different countries to capitalise Islamic banking and finance by giving seminars, workshops, trainings, etc. to their people. In fact, international orientation and conferences has been positively accepted in all parts of the world such as Europe, U.S., Africa, and Asia. “The main aim of these programmes is to provide a central platform and communication channel for researchers, academicians, business leaders, and financial industry practitioners to meet and discuss critical issues and ideas relating to Islamic banking and finance” (Ahsan, n.d., p. 118). Banks That Will Be Going to Research: Banks that can be considered for research are those that offered Islamic financial services in Saudi such as Al Rajihi Banking & Investment Corp, Islamic Development Bank, and Saudi British Bank, and in UK such as the Islamic Bank of Britain, HSBC Amanah Bank, and Lloyd TSB. To prove that promoting Islamic banking in the banking sector is worthy then comparing these banks with some of the conventional banks in Saudi Arabia like The National Commercial Bank (NCB), Saudi American Bank and Saudi Investment Bank, and major UK-based banks like Standard Chartered, Barclays, and Royal Bank of Scotland Group are helpful. Islamic banks are growing rapidly at a rate of 10-15 percent annually (FSA, 2006). Procedure: As education elevates financial literacy on Islamic banking and conventional banks, the plan needs considerable amount of capital for financial institutions might think twice of this trial and error means because of the ongoing recession. Profit is also uncertain brought by the reality that Islamic banks have incurred lucrative losses when they entered the real economy as they are more prone to risk. The challenges for conventional and Islamic banks are the same as both of them are expected to implement new ways of improving their financial performance at a higher rate. However, they differ in principles considering that Islamic banks operate in accordance with Shariah which is to promote profit-and-loss in line with the prohibition of riba, while conventional banks operate based on the principle that if the person invested more, then he or she will get more. In terms of capital and performance, conventional banks appeared to have more as they viewed money with intrinsic value while Islamic banks are forbidden to take money from money or riba. Therefore, there is no doubt why conventional banks like NCB are considered to be one of the largest banks in Arab world in terms of financial records and capacity fund. However, the fact that conventional banks have higher total capital or total assets compared to Islamic banks is not an assurance that they will take advantage in terms of profitability performance. In study of Hassan and Bashir (2003, p.8), “Islamic banks seem to be better capitalized than commercial banks with similar size.” This is because Islamic banks bear the risk of transaction in terms of operational excellence just like Al-Rajihi Bank and Islamic Bank of Britain which are among the fastest growing banks whose performances are based on Shariah. Important Things in Research Methodology Research methodology is extremely important in doing research for it is the so called methods and procedures that will describe, explain, and predict appearances in order to solve a problem by giving a work plan. This work plan will guide the researchers on how the research will be carried out through the use of different research methods such as qualitative and quantitative procedures, experimental studies, mathematical and scientific knowledge, and many more. This procedure does not only require a researcher to be knowledgeable on all these research methods because the important things in research methodology are the following: To know on how to select suitable research methods for the undertaken research. The researcher should have the capacity to know on what are the necessary approaches that should be used for the research and what are those that should not be used. The chosen method will be thoroughly analyzed by methodology in terms of the method’s restrictions, significance, and potentialities. It is not enough to know what research methods are applicable for the situation and on how it should be applied because as a researcher, he or she should also have the knowledge to know the correct methodology suitable to answer the research problem. For example, qualitative research talks about data analysis while quantitative research is about data collection, therefore, the researcher needs both of these methodologies in order to have a good piece of research. It is also important to consider the accuracy of the methodology that is being used so that results will be made consistent not just throughout undertaken research but also coherent with other research studies that using the same methodology. Aside from being accurate, methodology should also be efficient in choosing methods. Say for instance, the research on the promotion of the Islamic banking as the new image of representation of financial services. On this research, the research methods that have been used are some of the theoretical procedures and experimental studies. In terms of methodology, the research will be utilizing the descriptive type that deals particularly with the present and existing condition of the banking sector. This will include the quantitative elements as to the individual surveys of researchers and qualitative elements that measure those within the business domain. The quantitative and qualitative data that will be put to review will be gathered from previous survey of researchers. Research method is specific in the sense that it helps in providing a research study with a solution; however, research methodology is much broader considering that it does not only give the work plan of research but it also provides a chance to study a research in depth with critical and scientific attitudes. It usually answers the following questions (Rajasekar et al., 2006, p.3): Why is particular research study undertaken? How did one formulate a research problem? What types of data were collected? What particular method has been used? Why was a particular technique of analysis of data used? This only signified that the process itself and not just the result is one of the important things in research methodology. References Ahsan, M., n.d. The experience of the Islamic Foundation UK in promoting Islamic Economics. [Online] pp.115-122. Available at: http://islamiccenter.kau.edu.sa/7iecon/English/Englisg%20Papers/%5B12%5D%20Manazir%20Ahsan.pdf [Accessed 11 March 2011]. FSA, 2006. Islamic banking in the UK. [Online] Available at: http://www.fsa.gov.uk/pages/About/Media/notes/bn016.shtml [Accessed 11 March 2011]. Hassan, M.K. & Bashir, A.M., 2003. Determinants of Islamic banking industry. [Online] Available at: http://www.nzibo.com/IB2/Determinants.pdf [Accessed 7 March 2011]. Rajasekar, S. Philominatha, P. & Chinnathambi, V., 2006. Research methodology. [Online] Available at: http://www.scribd.com/doc/6949151/Research-Methodology [Accessed 7 March 2011]. Read More