RESEARCH PROPOSAL

Research Proposal

Research Proposal

Title of the Research

The topic that I have chosen is “The role of Islamic banking in Britain”.

Background

Islamic banks are responsive to the needs of their Muslim customers, but it is important to note that they do not act as religious institutions. Some people feel that Islamic banks also work to maximize profits, but in a way that is rather more suitable. This is because they try to act as intermediaries between investors and savers and are involved in offering custodial and other relevant services which are also found in the banking systems which are traditional (Iqbal & Molyneux, 2005, pp. 37). The Islamic banks face different types of constraints and problems compared to traditional banks as they are based on the prescriptions, rules and regulations present in Shariah law, and those rules include certain duties that apply to transactions which are commercial. Apart from that, the Shariah law derives its rules and regulations from Hadith, which are the authentic traditions and provide a guideline for Muslims to follow in their general lives and also in their business lives. Therefore, Islamic law places effects on the functioning of the banking system to a great extent.

Problem Situation

The problem situation I want to investigate is related to the issues that arise in the Islamic banking system and therefore exert effect on the functioning of Islamic banks in Britain. There are four factors which remain unique to Islamic banking. The first of them is the prohibition of interest, which is known as Riba in Islamic terms. Riba is the main difference which exists between Islamic banking and banking which is traditional (Iqbal & Molyneux, 2005, pp. 38). The religion of Islam highly prohibits all types of Riba, which is the interest that is given on loans, on the basis that the interest rate is a kind of exploitation and is therefore conflicting with the idea of fairness. This basically means that Shariah law does not people to fix a return that is positive on loans as the reward for wait, the way it is done in advance in traditional form of banking. The disagreement here is that Riba does not imply appropriation that is improper and is of property of other people which is bad for growth in long term or short term. Islam duly recognizes the value of money, but realizes time value as not a part of a contract loan, and states that it can only be realized as a part of real transaction. An example can be that in an agreement of a leasing, the time value of money plays an integral role in the rent to which both the parties agree, and longer leases are usually expected to yield returns that are higher. Almost all of the Islamic banking is based on this basic principle of not following Riba and not doing transactions that include or are based on Riba.

Research Questions

There are research questions to which I will try to find the answer to by ...