Islamic banking - Dissertation Example

These research findings show that both bank managers/staff and customers perceived that there is less awareness of Islamic banking products/services. The respondents could not distinguish the difference between conventional offerings and Shariah compliant offerings; thus, they are not motivated to have an Islamic banking account. Their primary reason of using the Islamic banking is not related to profitability or religion, but it is on the perception that the system is rewarding for the life hereafter.

This paper reflects two important implications. First, Islamic banks must increase customer awareness on the product/service offerings of the system through advertising in the real world and through the Internet. Second, it should increase its number of network and distribution channels to gain competitive advantage and allegiance by disseminating Islamic banking information. This research will be of interest to both conventional and Islamic banking in the Muslim and non-Muslim countries. This paper provides fresh results on the level of awareness of Islamic banking in the UK and Saudi Arabia. 1. Introduction 1.

1 Background Information Islamic banking is the new representation of financial system and it is also one of the fastest growing industries in the global financial market. It is also considered as the best solution during financial crises and credit crunch in looking for a better and fairer way of managing money and in underpinning the real financing activities. Islamic banking is following the Islamic Shariah law and Islamic financial system which are derived from the Holy Qur’an and Sunnah (Strom et al., 2007). Thirty years ago, Islamic banking existed.

The intention of this study is islamic banking as the new representation of financial system and it is also one of the fastest growing industries in the global financial market. It is also considered as the best solution during financial crises and credit crunch in looking for a better and fairer way of managing money and in underpinning the real financing activities. Islamic banking is following the Islamic Shariah law and Islamic financial system which are derived from the Holy Qur’an and Sunnah.

Thirty years ago, Islamic banking existed only in major Islamic countries and become a profitable segment of the banking industry considering that 20 percent of the world’s population was Muslims and Islam being the third largest religion. The Islamic banks primary clients are those people that keep away from paying nor receiving interest of any form and for them to have a source of income, they established a profit and loss sharing banking system that permit them to share the risk with client.

Islamic banks are required to operate based on Islamic jurisprudence and this law inhibited them from paying and accepting interest fees (RIBA). Muslims are inhibited because it brought a lot of negative effects on human beings’ earning capacity and purchasing power, incredible poverty in the society and unequal wealth/debt crisis in the economy. However, the common banking system operates on the basis of interest which is also known as the conventional banks.