Can Islamic Finance Ever Become A Mainstream Product In UK Essay

fuck Islamic Finance Ever Become A Mainstream Product In UK - Essay ExampleIntroduction The emergence of the capitalist system that focuses on the acquisition of individual lettuce has been long supported as the best economic policy for most countries to follow, because market forces tend to residue out economies in the long run. The banking system in the UK also functions under the capitalist model, wherein acquisition of net is an integral part of the system and greed or the unbridled pursuit of wealth has become the favorite slogan for individuals and corporations (Ayub,2007, p. 31). The need towards profit is the cornerstone of the UK banking system. The recent monetary crisis and corporate scandals such as Enron look at however, dispelled the deregulation which existed previously and given rise to stricter fiscal regulation of money markets (Von Hagen and Ho, 2007). Deregulation of the banking system has been doomed for the speculative activities of the stock markets an d the unrestricted use and issue of credit, which led to the financial crisis (Money morning, 2009). In the contemporary financial environment, the Islamic banking model offers a completely different approach to banking and lending, because it is not based upon the profit motivation that characterizes UK banks. The Islamic banking system is based upon sharia law, wherein the charging of interest on loans to gain profit is forbidden and is considered to be contravene the religious tenets of Islam. The question that arises in this context therefore, is Can the Islamic banking system offer a viable financial choice in the U.K.? Since Islamic banks do not charge interest and thereby provide an opportunity for consumers to borrow loans without large additional amounts being charged as interest, would this be a more ethical and equitable form of banking? The research question that is to be examined in this work is Can Islamic Finance ever become a mainstream product in the U.K.? Banking system in the U.K. In the U.K., the banking system is dominated by four large banking conglomerates, Royal Bank of Scotland, HBOS, Barclays, and HSBC. The financial crisis of 2007 also impact the regulatory system in the UK, producing a tightening up of banking operations (Gola and Roselli, 2009). In March of 2009, the monetary Services Authority in the UK put forward proposals which were geared towards the overhaul of the banking system and its governing rules, particularly in regulating lending criteria and clamping down on the unrestricted use of credit, in order to balk a recurrence of the financial crisis (BBC News, 2009). For many consumers, the high interest rates on bank loans and credit cards are a significant drawback leading to losses, which are especially difficult in the current recessionary environment. The application of Islamic law could therefore potentially lead to the evolution of a balanced, sustainable and equitable economic order, because it can help to pro vide a balance between fond and economic principles, as the Islamic system is based upon principles of morality, i.e, Islamic law does not allow array of interest in banking, for example (Ayub, 49). Islamic banking The shariah or Islamic law is the dominant implicit in(p) principle in all Islamic financial transactions, because Shariah compliance is the raison detre of the Islamic financial system.(Ayub, 43). Three salient Shariah principles influence the banking industry, i.e, riba, gharar and gambling.This risk sharing model is the