Islamic Finance in Europe
Title: Islamic Finance in Europe
Author: WILSON, Rodney
Series/Report no.: EUI RSCAS PP; 2007/02
Islam all too often resonates negatively in Europe, with a great part of non-Muslim public opinion uncomfortable with Islamic culture and values. Secular and Christian opinion is at best suspicious of shariah, Islamic law, and indeed often antagonistic. The notion of wanting to apply shariah principles to banking and finance is treated with scepticism if not outright hostility, especially as there is no concept of Christian or Jewish banking, even if there are some parallels between shariah financial principles and the teaching of the Old Testament. Yet Islamic finance is thriving in Europe, and many major European banks perceive it as a profitable opportunity to generate new business rather than as a threat to existing business. Although Islam is sometimes viewed as prescriptive and concerned with restricting choice, Islamic finance is about widening choice, and in particular about providing alternatives to interest based finance. The aim is to develop financial products that are seen as ethical and within the realm of socially responsible investment. The approach in this research is largely thematic and institutional rather than geographical, with the subject viewed from a European rather than an Islamic world perspective. It is perhaps appropriate to start by examining the role of Islamic finance in Euro-Arab banking relations. Much of the focus is on shariah compliant asset management, with a section on liquidity management without the use of conventional instruments such as treasury bills, and an extensive discussion of the structuring of Islamic sukuk securities. In the banking field the development of Islamic retail banking in Europe is reviewed, with a further section devoted to shariah compliant wealth management and private banking. Prospects for Islamic investment banking are also considered as well as the European experience of shariah compliant fund management. Finally future prospects for Islamic banking and finance in Europe are assessed, notably the provision of shariah compliant services for continental European Muslims, and the possible implications of Turkey’s accession to the European Union will be examined, although there the fortunes of Islamic finance have been rather mixed.
Subject: Islamic finance; shariah; Euro-Arab banking
Type of Access: openAccess