UK BANKING

The Nature of Islamic Banking in Correlation with UK Banking

The Nature of Islamic Banking in Correlation with UK Banking

Islamic Banks and Financing

Islamic banks operate according to the criteria of legality and ethics derived from Islam. Even so, it provides the funds to owners and users alike with opportunities to reap the profits. At the same time, the owners bear the proportionate share of funds from the risk lies with the businesses funded. On the other hand, Islamic banks provide financing to businesses, by participating directly in the net results of their work, or through the financing of purchases of assets, goods and services.

Therefore, it is expected that Islamic banks acquire major shares in business enterprises, and to sit on the boards of these institutions. Can, therefore, Islamic banks use the information they receive from their deals in business to reduce the risks faced by banks, usually as a result of asymmetry of information between donors and funders, and to calibrate their investments directed to those institutions as their needs and profitability. In addition, Islamic banks are able to trade in goods and services, and to provide insurance services and work in the financial markets. In other words, the Islamic banks as banks are not comprehensive and commercial sinks. In contrast, all of this is prohibited to do on conventional banks operating in most countries (Archer 2002, pp. 2).

Islamic finance, have grown over the last decade at an annual rate of 15%, reaching 951,000 in 2008 billion of assets and maintaining world, despite the crisis, good prospects for expansion in both developed countries and in other Muslim tradition emerging in Europe. It was because of the crisis of the nineties, but especially from the 11-S that Muslim states resolutely pushed their own banking, fueled in large part to the equity that was taken from Western banks thereafter.

For a decade, a number of financial institutions have emerged in Britain, but none succeeded until now to get the bank status. Islamic banks have emerged from the early 60's in Egypt; they have developed a remarkable way through 75 countries mainly in the Arab world and Asia. Constantly increasing, approximately 15% per year, they now represent a weight of 200 billion into the banking industry.

The UK financial regulator (FSA) has authorized the Islamic Bank of Britain (IBB) to open its first branch in London. The Islamic Bank of Britain will offer 1.8million Muslims Britain a full range of products and services obeying the Sharia.

Over the past two decades, the Islamic finance has shown 10 to 15% year on year growth and is becoming an integral part of the Financial Industry.

First Islamic Bank in the UK

The authorization by the FSA to create an Islamic bank therefore responds to a real expectation of Muslims living in Britain.

With the installation of the first Islamic bank, the London market in international finance is reinforced. The UK became the first Western country to specifically address the needs of its Muslim ...