International Islamic banks, Reasons for the emergence and general characteristics of Islamic banks - International Finance

International Islamic banks

Reasons for the emergence and general characteristics of Islamic banks

The rapid social and economic transformation of a group of Arab countries based on the intensive receipt of petrodollars due to the multiple increase in oil and gas prices in the world market allowed them to invest large financial resources in a new type of banking activity - Islamic banking based on the principles of the Holy Qur'an . Already in the mid-1970's. a number of Arab countries began to form state, private and mixed financial institutions, which soon became international.

They were based on the conceptual provisions stemming from the Quran and related to trade, which is a respected activity. Let's list these provisions:

• a person is not the owner of property (money, goods, real estate, etc.); he by the will of Allah for the period of his life receives the right to dispose of the resource (property, financial means, etc.);

• A person should not benefit from the misfortunes of others;

• the means that a person has the right to be directed to the benefit of the family and society, but in no way to the detriment of society;

• Property, money, other resources should not be passive (performing the role of treasure), but play an active creative role. But they can not be used for speculative purposes (for example, games in the casino are prohibited, the use of derivative financial instruments - derivatives);

• The main purpose of the funds and property of a Muslim is active rational use of them for the benefit of the whole society; At the same time, the element of personal material remuneration to the person managing property is very important (he is actually given the role of private owner). The goal is to create real added value, increase the mass of goods and services, and not increase the money supply of the owner;

• It is strictly forbidden to exploit a person by a person (not to mention the use of forced labor), coercion to work, to commit any acts by blackmail, threats, etc .;

• The expenditure of money and other resources owned by a Muslim, or their exchange, is not considered an exploitation act, although it is economically expedient to use them and, accordingly, a guaranteed remuneration for the used property (means, machines, technology, experience)

• In accordance with the principles set forth, credit is not allowed on interest terms, which is usually the case for credit transactions, the mechanism for using the property rests on the share participation of property owners in their profits and losses relating to the business enterprise. In the event of losses, the creditor will, of course, incur losses.

The above principled provisions are fully distributed in Muslim countries to banks and other organizations that perform banking functions. The main difference between Islamic banks and all other banks is the rejection of loan interest. This allows them to replace the traditional criterion "money price", which is subject to numerous, including speculative, impacts on a more adequate category "efficiency capital & quot ;. This also excludes debt financing, since the funds raised by the rate of profit are channeled directly to the relevant sectors of the economy. Experts consider it legitimate to draw an analogy with this approach to the functioning of the share market, when funds are mobilized through direct participation in equity financing . Increasingly, it is argued that financing at the expense of a joint-stock capital is the future of corporate finance, the antipode of which is the order of debt financing that is alien to Islam or traditional bank credit.

Thus, the economic theory laid down in the 7th c. based on the teachings of the Koran. A small number of countries, Saudi Arabia, the United Arab Emirates, Kuwait, Iran, Pakistan, the Sudan, etc., follow the basic postulates of Muslim ethics more or less strictly. However, the above principles are quite successfully used in the practice of many banks, including those created in countries not listed above . In 1975, the Intergovernmental Islamic Development Bank and the first commercial bank Dubai Islamik bank were established. Both of them successfully develop, promoting development programs in different Muslim countries.

Currently, banks, guided by Islamic principles, operate in more than 50 countries around the world. This indicates their competitive abilities (compared to conventional banks). As international practice shows, such well-known corporations as IBM, General Motors, Alcatel, etc. are increasingly resorting to these banks' services. Such large banks and lending institutions as > Chase Manhatten , Goldman and Sacs , JP Morgan and others, open Islamic divisions in their structures. Citibank in 1997, established in Bahrain, a subsidiary of Citi Islamic Investment Bank, and after the global crisis such banks were established in many countries of the East. In total, there are more than 350 financial institutions of this type in the world with a total capital of $ 100 billion and total assets of more than $ 1 trillion. Their net profit in 2011 was over $ 15 billion, return on assets was 1%, and the profitability of bank- 12%.

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