StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

The Wealth in the Arab and Islamic Populations - Essay Example

Cite this document
Summary
The paper 'The Wealth in the Arab and Islamic Populations' is a great example of a finance and accounting essay. One of the most widely acclaimed areas of banking in recent years is that of Islamic Banking. Many Islamic countries such as Saudi Arabia, Kuwait, and others such as Iran and Iraq, have a substantial number of their populations…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER97.8% of users find it useful

Extract of sample "The Wealth in the Arab and Islamic Populations"

One of the most widely acclaimed areas of banking in recent years is that of Islamic Banking. Many Islamic countries such as Saudi Arabia, Kuwait, and others such as Iran and Iraq, have a substantial number of their populations that subscribe to Islamic precepts, including those relating to banking. As some of the people in these countries and others have moved on to Western nations such as the United Kingdom and the United States, there have been continuing interest in ensuring that there are banking products for these groups, in ways that do not violate the tenets of their religion. Research, knowledge, and creativity, are opening up the way for the banking system in the UK and elsewhere to satisfy the Islamic population groups in their communities, thus tapping into some of the wealth in the Arab and Islamic populations. London, dubbed The City, is known as one of the foremost banking centres in the world. As such, those in the banking community, have their pulse on what is going on around the world, in particular, with respect to meeting the banking needs of the well-heeled. That Islamic Banking has attracted so much attention in The City is a testament to the growing importance both of the Islamic community and of the need for businesses to extend themselves beyond traditional comfort zones to meet new challenges and opportunities. In 2005 the Lord Mayor of the City of London, Alderman Sir David Brewer, launched the Islamic Finance Qualification (IFQ) which is meant to be a global benchmark examination focusing on Islamic Banking. This is meant to be a Computer Based Testing program, which also means that Islamic Banking is very much into the 21st century even though Islam itself dates back several centuries. As the article “Lord Mayor London to Launch Islamic Banking…” notes, “The IFQ has been jointly developed over the last year by the Securities & Investment Institute (SII) and the Ecole Superieure des Affaires (ESA), to respond to the rapid expansion in the Islamic Finance and Banking sector. The Advisory Council for Islamic Finance responsible for the IFQ's development is chaired by the First Vice-Governor of the Banque du Liban, Dr Ahmed Jachi. It comprises leading Sharia scholars and practitioners from around the Persian Gulf and the UK” (Lord Mayor to launch Islamic finance qualification 2000). It seems from the foregoing that the West has gotten smart with respect to dealing with sensitive issues such as culture and religion. The involvement of Sharia scholars makes it clear that this is not a Western package being foisted on Muslims, which at any rate would not have succeeded but that it has its provenance within the upper echelons of the Islamic community itself. The success of Islamic banking outside the traditional Islamic enclaves has entailed a great deal of work on the part of important personages from around the world through consultations and conferences. One of the organizations that has been at the forefront of the promotion of Islamic banking is the Islamic Financial Criteria Organization, which was founded in 1991, and has been pushing for some kind of standardization across the board. “The Organization has around 130 members from 30 countries and has contributed to the boost of the Islamic financial and banking work which witnessed a noticeable growth of 15 percent over the last years” (Finance undersecretary heads to UK 2006). Why all the excitement about Islamic banking in London? The basic point is that Islam forbids the charging of interest on a loan or the payment of such interest. Devout Muslims, therefore, often refrain from buying homes and other property that are structured in such a way that they have to pay interest. This is of course the traditional way in which Western mortgages are packaged. Once the bank makes the lump sum payment to a client to cover the sale of a house, the client is then obliged to pay both the principal and interest on the loan in installments. For Muslims, this is a clear violation of the Koran. Considering that there are millions of Muslims across Europe and the United States their not taking advantage of opportunities for home ownership, in a way, hurts these families as some of them continue to pay rent for years without having the benefit of ownership of their own homes. For those who come from countries such as Pakistan or India it is possible in those countries to build a house from scratch and pay for it because the cost may not be prohibitive. But in the UK and the United States, for example, where homes are so expensive, getting the assistance of a bank is often the only real option for would be purchasers. In the United States as well as in the United Kingdom, Islamic banking has moved away from the realm of dreams and empty talk to practical products that Muslims can benefit from. The United Bank of Kuwait Plc (UBK) is one such banking organization that has begun to offer products in the United States marketplace. The bank's effort is unusual in several respects. For instance, UBK is launching the product in California, while the U.K.-based bank's only U.S. office is a New York branch. Technology and vast networks of independent mortgage brokers are key to the bank's effort, said Abdulkader Thomas, general manager of the bank's New York branch. UBK was also the first foreign bank to receive approval from a U.S. banking regulator to offer an Islamic banking product. (Chapman 2006) Another company, Intercap Investment Inc., which is U.S.-based, has started an equity fund index geared to the needs of Muslims. The demand for such products continues to rise. As Claire Chapman explains with regard to mortgage offerings in the US, “According to the Sharia, interest charges are banned and investment capital is rewarded with profit returns instead of interest payments. UBK is offering residential mortgages in the form of leases in order to satisfy the religious requirements of Islam. UBK finances the home purchase contingent upon the branch and the customer executing a net lease and purchase agreement” (Chapman 2006). There is no guarantee, however, that the product will succeed automatically. The bank recognizes this and has been putting a great deal of effort into a mail campaign in California, one that generated 15% positive response within a few days. That provides ample proof that this was a product that was very much expected in the market. It does not hurt that California has a large number of Muslims. Other areas that are targeted include the New York area and Washington, D.C., both of which have a substantial number of Muslims. According to Mushtak Parker, North America is ahead of the United Kingdom in terms of available products for Muslims in the areas of finance and investment. Such well known American banks as Citigroup, Merrill Lynch, and Goldman Sachs have provided short term depository opportunities for wealthy Muslim clients and Islamic banks and in Canada, the National Housing Cooperative, based in Toronto, has been experimenting with Islamic mortgage products for years. In recent years, the competition has heated up as the UK and the United States both begin to provide ways for facilitating Islamic banking. In the UK Gordon Brown, the chancellor, has abolished double stamp duty on Islamic mortgages. “The Americans went a step further and reduced the risk weighting (money set aside by banks to cover their lending) for Islamic mortgages to 50 per cent-the same as for conventional mortgages” (Parker 2006). Many Islamic companies and banks have invested heavily in the American real estate market, with Arcapita of Bahrain, for example, controlling a real estate portfolio of “more than $1.5 billion (Pounds 860 million) and a corporate investment portfolio worth another $1 billion”(Parker 2006). Even though in the wake of the events of September 11, 2001, Islamic banking has come under the microscope in the United States, that market is still fertile for development. It is a common element in business for smart money to follow an upward trend. The increasing wealth of Arab countries and the need for those from Islamic backgrounds to make wise use of their funds continues to attract attention. For example, research indicates that, “Islamic banks are expected to seize 40 to 50 per cent of savings around the world in the next 10 years, Gulf News reported today quoting from a report from the Dubai Islamic Bank. The report gave an indication of the strong position Islamic banks have already occupied at the global level, due to their good reputation and commitment to financial rules” (Islamic banks to seize 40 to 50% of savings 2006). Already there are more than two hundred financial institutions around the world that are considered Islamic and the assets of these institutions are in excess of US$262 billion. In both the United Kingdom and the United States, Muslims themselves have been at the forefront of creating products and setting up banks that meet the criteria expected of Sharia. For example, the royal family of Qatar, in 2004, set up the United Kingdom’s first Islamic bank, which is really the first bank of its kind to be adjudged fully compliant with Islamic law, obtained a license from the Financial Services Authority, which regulates banks in the UK. Since Muslims cannot receive interest payments as well, “Islamic bank depositors are usually offered a profit share in the bank. Muslim scholars have devised elaborate transactions, involving the principle of sale-and-leaseback, to provide products such as mortgages which do not fall foul of Islamic law”(Mortished 2004). Some people look cynically at these new products and maintain that it is all a matter of semantics – interest, profit-sharing – it is all the same. Be that as it may, these new products allow Muslims to sleep well at night, knowing that they are being true to their faith and to their God, Allah, the Merciful, the Benevolent. Bibliography Chapman, Claire. “U.K. Bank offers Islamic mortgages.” Thomson’s International Banking Regulator, Vol. 10 Issue 17 (04/27/98). “Finance undersecretary heads to UK.” Arabia 2000 (06/12/2006) “Islamic banks likely to get half of savings around the world.” Arabia 2000 (11/17/2004). “Lord Mayor to launch Islamic finance qualification.” Arabia 2000 (10/24/2006) Mortished, Carl. “UK’s first Islamic bank confirms Pounds 40 m float.” (08/27/2004):29. Parker, Mushtak. “Muslim money still talks in America.” Islamic Banking (04/26/2006):10. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(The Wealth in the Arab and Islamic Populations Essay Example | Topics and Well Written Essays - 1500 words, n.d.)
The Wealth in the Arab and Islamic Populations Essay Example | Topics and Well Written Essays - 1500 words. https://studentshare.org/finance-accounting/2030967-the-wealth-in-the-arab-and-islamic-populations
(The Wealth in the Arab and Islamic Populations Essay Example | Topics and Well Written Essays - 1500 Words)
The Wealth in the Arab and Islamic Populations Essay Example | Topics and Well Written Essays - 1500 Words. https://studentshare.org/finance-accounting/2030967-the-wealth-in-the-arab-and-islamic-populations.
“The Wealth in the Arab and Islamic Populations Essay Example | Topics and Well Written Essays - 1500 Words”. https://studentshare.org/finance-accounting/2030967-the-wealth-in-the-arab-and-islamic-populations.
  • Cited: 0 times

CHECK THESE SAMPLES OF The Wealth in the Arab and Islamic Populations

Emaar Company - Competitive Position, SWOT Analysis, Global Strategic Map, Means, and Tasks

The market value for the company has currently improved and this better signs for the future with the company predicting good returns (Emaar Company Reports, 2007)The company was also recognized for this impressive performance and was awarded the 'Best Developer in the United arab Emirates' and received the Euromoney Real Estate Award for the second consecutive year running....
17 Pages (4250 words)

War and International Statecraft

… The paper "War and International Statecraft" is a good example of a finance and accounting essay.... International relations concern the diplomacy that goes on between nations in order to ensure that people in the different countries are well and secure.... In the past, peace between nations, especially those that shared common interests in human or natural resources was hard to come by....
15 Pages (3750 words) Essay

The United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances

… The paper "The United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances" is a great example of a finance and accounting essay.... United Nations Convention against Illicit Traffic in narcotic drugs and psychotropic substances, 1988 strengthened the fight against the use and distribution of illicit drugs all over the world....
14 Pages (3500 words) Essay

Globalization in the Arabian Gulf States

lobalization and the arab Gulf ... Globalization is increasing at the highest rate especially in the United arab Emirates.... Globalization is increasing at the highest rate especially in the United arab Emirates.... ithin a short period of time, the United arab Emirates has witnessed tremendous growth in political, social and economic....
11 Pages (2750 words) Case Study

Feathers Fashion Analysis

The United arab Emirates has become a key market for men's and women's fashion.... The United arab Emirates has become a key market for men's and women's fashion....  Feathers Fashion website (2015) stated that Feathers Fashion is a company in Abu Dhabi, United arab Emirates Company which market and sells apparel....
17 Pages (4250 words) Case Study

Entrepreneurship in Saudi Arabia - What You Must and Must Not Do

… The paper "Entrepreneurship in Saudi Arabia - What You Must and Must Not Do" is a perfect example of a business case study.... In 2009, Saudi Arabia was ranked by the World Bank as the 13th most favourable business environment in the world.... Over the years, the Saudi Arabian government has implemented regulatory reforms that have drastically improved and boosted entrepreneurship in the region....
9 Pages (2250 words) Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us