Islamic Banking

• Engels
• MBO
• Studiejaar 4

Islamic Banking

What do you think Islamic Banking could be about?

A little bit of background....

• Charging interest is an ancient practice. Hammurabi (King of Babylonia)  charged 33,33333%
• Religion and interest is not a happy combination: 
• Bible, Torah and Koran prohibit interest. 
• Focus was on usury (woeker)

A little bit of background....

• Until the Dark Ages, Christians were prohibited from charging interest. 
• Calvijn and Luther were okay with interest but not with usury. 
• Protestantism paved the road to capitalism.

Principles of Islamic Banking

• Interest is haram (prohibited/unlawful). You have to earn your money, charging interest is not earning money. 
• Muharaba: the workaround. Someone else buys something you want but don't have the money for, and sells it to you for a higher (previously agreed upon) price. 

 

Principles of Islamic Banking

• Maysir:  gambling. It is prohibited because it won by mere chance. 
• Unethical funds: no investing in haram products like pork, porn, weapons or drugs. 

Upsides and downsides

• Upsides: no speculation, stable basis for investment and growth. Less ''bubbles''. 
• Downside: Islamic Bankers charge more for accounts.  

Islamic Banking today

•  $3.000 million in 2018
• Growing market
• <1% of total financial sector 
• You can take loans, open savings/deposit accounts (without interest), buy shares etc. 

Now that you know something about Islamic Banking, why would people use it?

Why Islamic Banking?

• More and more synonymous to ethical banking. 
•  No speculations 
• 50% of the banking sector in Saoudi Arabia, Dubai and Malaysia is Islamic. 
• Role model

Future in the Netherlands

• 1 million Muslims 
•  Big market, you can make big money
• Turkish banks want to start in the NL 
• Active in Germany

Would you ever consider opening an Islamic Banking account? Why?

What does Islamic Banking prohibit?

1. Interest
2. Saving money
3. Making money
4. Investing money

What are you not allowed to invest in?

1. Meat
2. Real estate
3. Weapons
4. Halal