Islamic Finance - Islamic Banking System

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(Ahmad & Umar, 2009) Study the regulatory and legal issues related Islamic Banking system in Australia. The study is based on the personal experiences, views and knowledge about the banking industry. It was concluded that although the Muslim community is only 2% of total population of Australia and there is no bank that is providing full fledge Islamic products and services. Despite of this, Government has taken some measurable steps in past to improve to grow the Islamic banking system in Australia. And based on the Government steps it is expected to have a positive role of the regulatory department towards the Islamic banking implementation in Australia (Siddiqui, 2008). Which is result would give advantage to both the banking system.

(Mansour & Abdelhamid, 2010) Study the selection criteria of either Islamic or Conventional Banks in United Kingdom. For the study data is collected through primary source that is a questionnaire is provided to 156 customers of bank in UK. These respondents are both Islamic bank and conventional banks customers. Analysis of data shows that the there are two major factors while choosing between Islamic and Conventional banks these are Service Charges and Religious Belief. However, people first look for the banks who charge low service charges no matter of it is Islamic or Conventional bank (Ghayad, 2008). And then they consider the religious belief that is Muslim will prefer to work with the Islamic banks and vice versa.

(Masood & Ahmed, 2011) Study the growth of both the larger and smaller Islamic banks and compare their loan to asset ratios and income expenditure ratios to conclude which banks have more stability than other. The study is based on the Z-scores and Ordinary Least Square Regression technique. On the basis of analysis it is concluded that the Larger Islamic banks have more investments and more expenditures than the smaller Islamic banks. On the other hand the Smaller Islamic Banks have low income, investment and less income diversity (Laldin, 2008). It was concluded that the smaller banks are more stable than the larger Islamic banks. These conclusions are confirmed by both Z-scores and OLS test results.

(Rehman, 2012) Compare the satisfaction and CARTER (Compliance, Assurance, Responsiveness, Tangible, Empathy and Reliability) model of Islamic banks in Pakistan, United Kingdom and United Arab Emirates. For the study primary data source is used for the data collected as a questionnaire is filled in by 75 customers of Islamic banks of each country. Data is analyzed using the Regression technique. Analysis of data reveals that assurance and compliance are the major factors for the Pakistani and UK customers. They can be attracted by the banks if these two are provided to them. However, for the UAE customers have more focus on assurance and tangibility (Smolo & Mirakhor, 2010). The study suggested that however, the number of Muslims are less in UK but they have a full fledge Islamic bank available which can attract them through the desired service quality which will consequently increase the growth rate of Islamic banks even in Non-Muslim country.

(Akbar & Kalmadi, 2012) Study the effectiveness of the Islamic banking in United Kingdom. The study analyzed the users’ perception about the Islamic banks in UK. For the study close ended questionnaires were used to get the response from the respondents. The analysis of data showed that it is very clear to everyone that the profit and loss sharing concept of Islamic banks are representing the religious views. But the structures of Islamic banking products are far complex which creates big problems for the people in UK to use the Islamic product. It is concluded that Because of their complex structures, United Kingdom is far away from the real concept of Islamic banking system and consequently people are reluctant to deal with the Islamic banks because they are not sure about the products (Opromolla, 2012). It is suggested that huge work is required on the part of financial bodies to reduce the complexity and use the different means to market the products offered by Islamic banks.

(Maturi, 2008) Analyzed the demand of the Islamic banks’ products and services in United Kingdom. The study focused on the Takaful product to know whether there is a real demand of these products as expected or not. The analysis is based on the questionnaires filled in by the people irrespective of whether they use the Islamic banks’ products or not. It was found that the people are willing to use the Takaful products if they are provided the same service quality as the conventional banks at the low prices. Some of the respondents showed that there is lack of awareness about the Islamic banking products in UK which lessen their growth. It was concluded that in UK the people do not consider whether they are dealing with the Islamic bank or the conventional banks they just focus on the service quality and price (Brown, 2010). In addition to this, the study suggests that the lack of awareness about the Islamic banking products is the biggest hurdle in its growth.

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Methodology

Research Design:

Since there is a lack of quantitative data about the Islamic banks and not much studies were previously done using the quantitative approach. Therefore, this study will be done using the qualitative approach to know the Islamic banking development status and its future in UK and what role the regulatory authorities are playing in its development whether the role is supportive or not.. (Jammeh, 2010).

Primary Data Collection:

To get the results of the study, the analysis will be done on the data collected using both primary and secondary sources (Douglas Amedeo, 2009). Primary source would be utilized for conducting interviews from professionals working in Islamic Banks, Central Banks and Islamic Sharia Board of UK. Secondary sources would be utilized for collecting the Islamic Principles and Sharia Laws laid down by Quran and Hadith.

Tool for Data Collection:

Using the open ended questionnaire the data will be collected. The questionnaire will consist of questions regarding the potential Islamic Financial products have in order to coupe up in the UK banking sector, what are the strategically lapses and strengths at regulatory authorities end and how these weakness can be corrected and positive aspects can be turned into favor (M. Spiegel & K. Rose, 2009).

Sources of Data Collection:

In order to collect