International Islamic finance

Abstract

Islamic Banking has both classical and modern connections. Guidelines to acceptable behaviour with regard to money and property were offered in the Quran whilst the compilation of further material and its interpretation is a process that began with the death of the Prophet and continues to the present day. Upon the establishment of the first Islamic bank twenty-five years ago, Islamic finance passed beyond the realm of jurisprudence and has since gained the respect of Western economis1;s and bankers alike. This period has spawned a considerable volume of theoretical works which detail the wide-ranging benefits particular to an interest-free financial system, and yet, little has been addressed to the experience of Islamic banks themselves. One of the problems for Middle Eastern banking in general is that an Arab marketplace, similar to the US or European example, still does not exist. By examining the performance of Islamic banks in Bahrain, the Arab world's closest equivalent, it is possible to assess the degree of success that a move to Western markets has allowed. The introductory chapter investigates the relationship between Islamic economic theory and practice while chapter two considers Islamic banking theory and comments upon the financing methods available in this sphere. The third chapter looks at the Euromarkets in the context of n6a-oriented finance and the opportunities that exist there for Islamic banks. Chapter four views Islamic financial activity in London and Geneva which contrasts with the experience of Islamic offshore in situations in Bahrain, the content of chapter five. A separate chapter studies the role of the Islamic Development Bank in promoting the spread of Islamic finance and considers how successful the bank has been in Islamic terms. The concluding chapter draws on the experience of n6a-free financial institutions over recent years to assess the future status and activities of international Islamic banking.