According to Mahlknecht and Hassan, there are more than three hundred Islamic Banks in sixty countries. The main objective of establishing an Islamic bank was to promote economic and social development of Islamic communities in pursuit of Shari’ah principles. …
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Some conventional banks have integrated Islamic banking by creating subsidiaries that offer Shari’ah products. Jurisdiction’s Central Bank Acts, Islamic Financial Services Board and Auditing Organization for Islamic Financial Institutions have been created to provide framework under which Islamic Banks will operate. Modern Islamic finance and banking took off in 1960s after Egypt launched a Social Bank in 1963. Initially, as early as 1973, Islamic Finance was confined to Middle East, although countries like; Pakistan and Sudan have tried to ‘Islamicise’ their financial systems. Middle East adopted, nurtured and preserved Islamic banks to what it is today. According to Mahlknecht and Hassan (2011), Islamic finance is expanding worldwide and growing at exponential rate. According to Kettell (2010), the world of Islamic Banking Competiveness Report 2007/08 stated that the value of Islamic banking assets and assets under management was expected to reach US$ 1 trillion by 2010.One of the important means through which Islamic finance is thriving is through offshore jurisdictions. According Ariff and Iqbal (2011), most of the offshore centres in the world are anxious to become influential financial locations and aggressively seek investors interested in global investment from any part of the world. Offshore jurisdictions that are fertile for Islamic finance include; Cayman Islands, Isle of Man, Jersey, Guernsey, Bahamas, British Virgin Islands, Bahrain, Labuan (Malaysia), Luxembourg, Dubai International Financial Centre and Dublin (Ireland). The offshore jurisdiction favoured for investment includes Turks and Caicos Islands, Bermuda, Barbados, Cook Islands, Labua, Liechtenstein, Mauritius, Cyprus and Gibraltar (Academie de Droit and International de la Haye, 1995). Growth of global investments has caused unprecedented growth of offshore jurisdictions in the past years. Uteem (2009) asserted that accumulation of petrodollars and increasing Muslim population, as well as increase in infrastructural projects demanding huge amounts of capital have increased demand for Islamic finance products. Furthermore, active participation of investors and independence of countries in Islamic capital markets are some of the reasons of growth and development of global Islamic finance (Muhammad, 2009). 2.0 The Research Problem Islamic finance is becoming one of the most attractive financial products across the world. Both Muslims and non-Muslims are approaching Islamic banks and Islamic financial institutions to meet their banking and financial needs (Hertwig and Maus, 2010). Islamic finance is based on the Shari’ah (Islamic law) and does not operate like a conventional financial institution. Rather, it has a different operating framework, which must meet the dictates of the Shari’ah. Ahmed (2011) hinted that unlike conventional banks, Islamic banks are faced with more challenges in terms of inadequate or failed internal processes, systems, external events or people due to perceived or real Islamic religion influence. As more money is
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(Islamic Bank Operating Framework: A Casestudy of Dubai and Malasyia Dissertation)
“Islamic Bank Operating Framework: A Casestudy of Dubai and Malasyia Dissertation”, n.d. https://studentshare.org/macro-microeconomics/1390294-islamic-bank-operating-framework-a-casestudy-of-dubai-and-malasyia-banks.
Responsiveness, empathy and tangibles all garnered agreement, while the assurance dimension received slight agreement overall. Moreover, on the perceptions of IBCs on the same dimensions, agreement was likewise garnered on responsiveness, assurance, and tangibles.
Conventional insurance, however, has been a taboo for the Muslim world as the premium insurance companies offer, lack of correct knowledge by their customers and the way cost of damages has to be borne by some unconnected persons had hitherto been debated.
After the financial crisis that has been experienced by the traditional banking industry, focus of everyone has been shifted towards Islamic banks (Willison, 2009). With the growing success of Islamic banks, number of Islamic countries have been considering to shift their banking sector to Islamic banking sector and the policies and regulations would be governed by Islamic teachings (Johnes, Izzeldin, and Pappas, 2009).
The objective of research is to examine the awareness of Muslims and non-Muslims customers and bank authorities of Islamic banking notably in Saudi Arabia and UK about the function and concept of this system through reaction toward it; to evaluate the performance of Islamic banking based on the available financial data.
The market for Islamic Financial products is at least USD 5 trillion. Modern Islamic finance and banking took off in 1960’s after Egypt launched a Social Bank. Initially, Islamic Finance was confined to Middle East; however, Pakistan and Sudan have tried to ‘Islamicise’ all their financial systems.
In the past, there used to be elite existences that were responsible for maintaining inflow and outflow of money in the market; however, since few decades, commercial banks have been performing this imperative task to maintain and improve economy of the country.
In the changing format of globalization and technology, the complex structure of international, national and regional economics and finance has become a major challenge for the global entities. The traditional model of financial institutions needs to incorporate wider interests of emerging new pluralistic society.
These performance measures also help in identifying corrective actions. Besides setting the near-term direction for an organization within budget constraints, the management is also responsible for setting the long-term strategic goals of an organization.
Would Islamic financial system be able to prevent the current global financial crisis? The global financial crisis of 2008 is largely attributed to the vulnerability to risk in the capitalist financial systems and an inherent lack of discipline in its investment and lending practices.1 Islamic banking and finance on the other hand, is described as more risk averse and highly disciplined in its investment and lending policies and practices.2 Studies comparing the performance of Islamic banks and conventional banks during the 2008 global financial crisis suggests that Islamic banks were more efficient,3 more profitable or more stable.4 Rawshan argues however, that Islamic banks were largely avo
49 Pages(12250 words)Dissertation
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