Banking: Looking to Islam

The UK media is awash with news on the changing face of financial regulation in the UK and in the US as policy makers seek to ensure the financial failures witnesses in 2008 never happen again.

With this a background the University of Leicester has announced a conference that will ask whether Islamic banking systems could provide guidance to western bank governance.

If Western banks had been operating on a similar system to Islamic Banks, would the global recession have been avoided?

Would an Islamic Insurance system have been more robust and less prone to the issues that led to the collapse of the world major insurance companies? In short, are there lessons for western banks from Islamic Banks?

From its beginnings as a collapse in the sub-prime housing market to a major global crisis, the impact of the current calamity is clear, but developing new practices which can address the issues that led the world to the brink of collapse are a vital part of recovery.

In order to address this fundamental question “how do we stop it from happening again?, The University of Leicester’s School of Management is hosting a conference to consider potential lessons from the Islamic Banking and Finance sector.

Professor Martin Parker, Director of Research for the Management School commented, “It is important for everyone’s future that we study the current crisis in order that more sustainable financial practices can be developed. This conference is a contribution to that project.”

The conference, will consider topics such as:

• Is the current form of Islamic banks, which has been developing its own practices over recent decades, more resilient than current Western practices?
• With the underlying principle in Islamic banking that the transaction be free from the interest of element and backed up by a tangible asset make it more robust?
• Would globalisation make the Islamic system vulnerable?
• Does the obligation of Islamic Financial Institutions on transparency make it less vulnerable ?

Conference coordinator, Dr Ibrahim Umar, said “This is an opportunity for economists, business practitioners, Islamic scholars, and private industries such as banking and insurance to come together to consider whether we can learn lessons from the Islamic system and, if so, what benefits might be achieved. It also gives us the opportunity to consider what potential situations or factors may have a detrimental effect in the future. The conference is open to both academics and practitioners. I hope that anyone who has something to add to the debate will attend.”