Abstract
The main purpose of this paper is to highlight the unprecedented growth of Islamic banking and finance in West with focus on United Kingdom. It captures the advancement of Islamic banking and finance in U.K over time It is observed that origin of Islamic finance in the UK can be traced back to early 1980s, however, real significant development was not made until the last decade of 20th century. The factors contributed to recent success of Islamic finance in UK include unprecedented Government support, fastest growing Muslim population, 9/11 factor, petro dollar wealth of Middle East etc. The future of Islamic finance in UK seems bright thought not without serious challenges. The potential size of industry suggests that Islamic finance will continue to be a darling of West for a long time to come.
Highlights
What triggers curiosity in Islamic finance is the absence of interest, which is the backbone of Western or Conventional banking and financial systems
The Islamic Banking and Finance (IBF) industry is growing at a staggering rate of 15% to 20% and has maintained this growth during the financial recession which made conventional banks significantly suffer and contract
It is observed that the IBF industry in U.K has accelerated rapidly within the last 10 years
Summary
What triggers curiosity in Islamic finance is the absence of interest, which is the backbone of Western or Conventional banking and financial systems. Apart from interest, other prohibitions include uncertainty, risk taking, ambiguity and investment in unethical and haram businesses. These prohibitions make up a wide part of activities of conventional banks. We provide a review of past and present as well as an assessment of future of IBF in UK. The significance of breakup of past and present is surrounding around 9/11 incident, which had significance influence of Islamic finance outside the Islamic countries. This incident resulted in the emergence of Patriotic Law in USA, which made USA unattractive for wealthy Muslim investors.
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