Can Islamic Financial Products Be Applied as Main Products in the UK



The emergence of the capitalist system that focuses on the acquisition of individual profits has been long supported as the best economic policy for most countries to follow because market forces tend to balance out economies in the long run. The banking system in the UK also functions under the capitalist model, wherein acquisition of profits is an integral part of the system and “greed” or the “unbridled pursuit of wealth” has become the popular slogan for individuals and corporations (Ayub,2007, p. 31). The motivation towards profit is the cornerstone of the UK banking system. The recent financial crisis and corporate scandals such as Enron have however, dispelled the deregulation which existed previously and given rise to stricter financial regulation of money markets (Von Hagen and Ho, 2007). Deregulation of the banking system has been blamed for the speculative activities of the stock markets and the unrestricted use and issue of credit, which led to the financial crisis (Money morning, 2009).

In the current financial environment, the Islamic banking model offers a completely different approach to banking and lending, because it is not based upon the profit motivation that characterizes UK banks. The Islamic banking system is based upon sharia law, wherein the charging of interest on loans to gain profit is forbidden and is considered to be contravene the religious tenets of Islam. The question that arises in this context therefore, is: Can the Islamic banking system offer a viable financial choice in the U.K.? Since Islamic banks do not charge interest and thereby provide an opportunity for consumers to borrow loans without large additional amounts being charged as interest, would this be a more ethical and equitable form of banking? The research question that is to be examined in this work is: Can Islamic Finance ever become a mainstream product in the U.K.?