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ISLAMIC BANKING IN EUROPE DEVELOPMENTS AND IMPLICATIONS

ABSTRACT

 

This paper examines the economic and financial issues surrounding the Islamic Financial Services Industry in Europe, focusing on the UK mortgage market. The paper has significance for European Financial Services generally. The European Muslim population exceeds 20 million and according estimates potential demand for Islamic mortgages in the UK is around £20 billion. First we discuss the background of faith based economic systems and how the Islamic faith provides a framework for the economic well being of society. Second, we outline three further aspects of Islamic Financial Services Industry (a) their strategic and operational vision (b) the demographic profile of the Muslim community (c) the requirement of Shariah compliant investment. In the final part we compare Islamic and conventional mortgages developing mathematical model of Ijara mortgage. In the Islam the borrower and lender relationship is transformed into a partnership relationship through risk sharing and in particular the sharing of profit (and loss). 

 

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