This study provides an assessment on the current problems and progresses made in France for the introduction of Islamic banking into its economy and contains an evaluation and an analysis of the potential market for Islamic retail banks in France.
The research is divided into two distinct parts; a secondary research exposing the opportunities and the barriers for the implementation of Islamic banking in France and a primary research aiming to assess and analyze the market for such a banking system through questionnaire administration. The secondary research is concluded by a SWOT analysis (Strengths Weaknesses Opportunities and Threats) on the current situation of Islamic banking in France with the help of statistical tools used for analyzing the primary research. Analysis includes descriptive analysis, cross tabulations, correlation as well as variance analysis.
Results of the secondary research shows that France has real trumps to welcome Islamic banking into its territory and few feasible amendments are still necessary to accelerate the process. Results of primary research showed that the Muslim population responded positively to a possible opening of an Islamic bank in France. As argued in the literature review, they represent an opportunity for the introduction of Islamic banking in the country.
It also appears that Muslims use conventional banking because they lack choice and even if they did they would have chosen Islamic financing if possible. Finally, analysis of variance demonstrates that there is no link between age, sex, profession and the attitude towards Islamic banking and also there is no link between the practices of religion.
Thus, the study finds that there are trumps and a huge potential market for facilitating the introduction of Islamic banking in France. However, the amendments process has to be accelerated to optimize the success of its implementation. Also, empirical studies on the topic should be multiplied so as to encourage Islamic entities to establish in France when it will be possible.
The study also considered that the analysis conducted is not without limitations. Some of them include the fact that the thinking of the participants could not be investigated further through questionnaires; some classes are more represented than others (18-25 years range is overrepresented compared to people 40+); forecast figures are not provided; and it is not possible to assess the sincerity of the participants.
Islamic finance and more precisely Islamic banking have recently been put in the spotlight amongst the financial activities and are subject to growing interest all over the world. This new trend is partly due to is exponential growth and to the optimistic forecasts being made on those financial activities. Hence, shari'a compliant asset is estimated to have reached $951 billion at end-2008 by the IFSL Research (2010 a) which is 25% more than end-2007. Commercial and investment banks hold the most shari'a compliant assets.
Moreover, Islamic finance is predicted to reach $4,000 billion in the future. This forecast makes it even more attractive. However, despite the figures above, Islamic banking activities are still concentrated in Muslim countries such as the Gulf Cooperation Council countries, Iran, and Malaysia. Amongst Western countries, only the United Kingdom made a big move by amending its legislation to make easier the creation of the first standalone Islamic retail bank in the Western world in September 2004 (Islamic Bank of Britain 2010). With the political willingness, double tax on Islamic mortgage was removed in 2003 and tax relief on Islamic mortgage for companies was extended to individuals too.
Tags: Islamic banking, sharia law, retail Islamic banking in France
[...] Appendix IV: Ethical Approval Form Appendix Participation Information Sheet You are invited to take part in a Master research study on the market for Islamic banking in France. You will find bellow the vital information regarding your participation to this study. If you have any issues regarding the questionnaire, please feel free to contact me (contact information below) so as I can help you with your enquiry. Who am I am a Master student in Accounting and Financial Management in Coventry University UK, and as part of my degree I am doing a dissertation on the introduction of Islamic banking in France. [...]
[...] According to the website, the opportunities for the implementation of Islamic banking in France are numerous Incertitude about the potential market The research on these topics pointed out the size of Muslim community in France as key opportunity for Islamic banking to be successful there. However Ingar (2008) argues that this is not enough to accelerate the pace of Islamic banking since the demand for shari'a compliant products from Muslims in France is still informal. He suggests that ‘consumers must show to the banks that they really need shari'a compliant financial services in order to reassure them'. [...]
[...] Thus, the study finds that there are trumps and a huge potential market for facilitating the introduction of Islamic banking in France. However, the amendments process has to be accelerated to optimize the success of its implementation. Also, empirical studies on the topic should be multiplied so as to encourage Islamic entities to establish in France when it will be possible. The study also considered that the analysis conducted is not without limitations. Some of them include the fact that the thinking of the participants could not be investigated further through questionnaires; some classes are more represented than others (18-25 years range is overrepresented compared to people forecast figures are not provided; and it is not possible to assess the sincerity of the participants. [...]
[...] We have seen during the analysis of introduction of Islamic banking in France that one of the threat was the competition amongst European neighbors, this should be faced by an acceleration of the amendments so as to be positioned on the market not too late and attract a consequent part of the extra liquidity that the GCC market is unable to absorb. The earlier France will adopt this new banking system the bigger will be the amount invested. It has been seen that the French legislation can easily be in line with the Islamic law in terms of financial products, but there also are taxation issues that have not been solved yet. [...]
[...] Other Appendix II: DJ Islamic Market Titans 100 Index structure as of 14 December 2009 Source: BNP Paribas (2009) Appendix III: European Council for Fatwa and Research's Resolution on "Permissibility of conventional mortgage under necessity" Fourth Ordinary Session [October 27-31, 1999] Resolution 2/4 Purchasing houses with a usurious loan for Muslims living in non-Muslim countries, i.e. taking up a mortgage to buy a house The Council discussed in detail several papers concerning the purchasing of mortgaged houses and came to the following conclusion: The Council stresses what had been agreed upon by the Muslim Ummah that usury is forbidden. [...]
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