Islamic banking is growing quickly, and firms are developing Sharia-compliant products designed to challenge conventional banking. Islamic banks want to open up markets for investors who insist on banking that conforms with Islamic law, but they also want to appeal to other investors. Multinational banks appear equally keen to expand their offerings to access a growing market. The BBC’s Middle East correspondent Mark Lobel reports from Abu Dhabi.
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Islamic banking: growing fast but can it be more than a niche market? (BBC, July 18, 2014)
“Ernst and Young (E&Y), in their latest World Islamic Banking Competitiveness report, shows the assets of Islamic banks grew at an average rate of 17% per year between 2008 and 2012. This is two to three times faster than the rate at which conventional banks grew over the same period, due in part to the global financial crisis.
Islamic banks differ because they have to run their operations in a way that is consistent with the principles of Islamic law or sharia. This prohibits banks from dealing with businesses that are considered sinful or haraam such as pork, alcohol and gambling. Admittedly, this is not much of a constraint.
However, usury or riba is also prohibited under sharia law so in principle banks cannot charge fees or interest for money lending…. How it works…. Fast growth explained…. ‘Huge untapped Muslim populations’…. Challenges ahead….”
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