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Islamic finance in Europe

Author

Listed:
  • di Mauro, Filippo
  • Caristi, Pierluigi
  • Couderc, Stéphane
  • di Maria, Angela
  • Ho, Lauren
  • Grewal, Beljeet Kaur
  • Masciantonio, Sergio
  • Ongena, Steven
  • Zaher, Sajjad

Abstract

Islamic finance is based on ethical principles in line with Islamic religious law. Despite its low share of the global financial market, Islamic finance has been one of this sector’s fastest growing components over the last decades and has gained further momentum in the wake of the financial crisis. The paper examines the development of and possible prospects for Islamic finance, with a special focus on Europe. It compares Islamic and conventional finance, particularly as concerns risks associated with the operations of respective institutions, as well as corporate governance. The paper also analyses empirical evidence comparing Islamic and conventional financial institutions with regard to their: (i) efficiency and profitability; and (ii) stability and resilience. Finally, the paper considers the conduct of monetary policy in an Islamic banking context. This is not uncomplicated given the fact that interest rates – normally a cornerstone of monetary policy – are prohibited under Islamic finance. Liquidity management issues are thus discussed here, with particular reference to the euro area. JEL Classification: G21, G28, G34, K21, L4

Suggested Citation

  • di Mauro, Filippo & Caristi, Pierluigi & Couderc, Stéphane & di Maria, Angela & Ho, Lauren & Grewal, Beljeet Kaur & Masciantonio, Sergio & Ongena, Steven & Zaher, Sajjad, 2013. "Islamic finance in Europe," Occasional Paper Series 146, European Central Bank.
  • Handle: RePEc:ecb:ecbops:20130146
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    File URL: http://www.ecb.europa.eu/pub/pdf/scpops/ecbocp146.pdf
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    References listed on IDEAS

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    Cited by:

    1. Guglielmo Maria Caporale & Abdurrahman Nazif Catik & Mohamad Husam Helmi & Faek Menla Ali & Mohammad Tajik, 2016. "The Bank Lending Channel in a Dual Banking System: Evidence from Malaysia," Discussion Papers of DIW Berlin 1557, DIW Berlin, German Institute for Economic Research.
    2. Guglielmo Maria Caporale & Mohamad Husam Helmi, 2016. "Islamic Banking, Credit and Economic Growth: Some Empirical Evidence," Discussion Papers of DIW Berlin 1541, DIW Berlin, German Institute for Economic Research.
    3. Caralis, George & Diakoulaki, Danae & Yang, Peijin & Gao, Zhiqiu & Zervos, Arthouros & Rados, Kostas, 2014. "Profitability of wind energy investments in China using a Monte Carlo approach for the treatment of uncertainties," Renewable and Sustainable Energy Reviews, Elsevier, vol. 40(C), pages 224-236.
    4. Yiqi Chu & Chengcai Li & Yefang Wang & Jing Li & Jian Li, 2016. "A Long-Term Wind Speed Ensemble Forecasting System with Weather Adapted Correction," Energies, MDPI, Open Access Journal, vol. 9(11), pages 1-20, October.
    5. Belouafi, Ahmed & Chachi, Abdelkader, 2014. "Islamic Finance in the United Kingdom: Factors Behind its Development and Growth," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 22, pages 37-78.
    6. Guo, Mingxin & Song, Weiping & Buhain, Jeremy, 2015. "Bioenergy and biofuels: History, status, and perspective," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 712-725.
    7. Mumtaz Hussain & Asghar Shahmoradi & Rima Turk, 2016. "An Overview of Islamic Finance," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 7(01), pages 1-28, February.
    8. repec:eee:crpeac:v:47:y:2017:i:c:p:39-60 is not listed on IDEAS
    9. Christophe Godlewski & Rima Turk-Ariss & Laurent Weill, 2014. "What Influences Stock Market Reaction to Sukuk Issues? The Impact of Scholars and Sukuk Types," Working Papers of LaRGE Research Center 2014-03, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    10. Piekut Marlena, 2015. "The Rich North-west, The Poor Middle-east – Consumption In EU Households," Comparative Economic Research, De Gruyter Open, vol. 18(1), pages 43-63, March.
    11. Dariusz Piotrowski, 2017. "Challenges and barriers to the development of sukuk in the European capital market," Proceedings of Economics and Finance Conferences 4807695, International Institute of Social and Economic Sciences.
    12. Sasho Kozuharov & Jana Ilieva & Natasha Ristovska, 2017. "Islamic Banking and its Perspectives," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 7(2), pages 167-177, February.
    13. Mariam El Hamiani Khatat, 2016. "Monetary Policy in the Presence of Islamic Banking," IMF Working Papers 16/72, International Monetary Fund.
    14. Alfred Kammer & Mohamed Norat & Marco Pinon & Ananthakrishnan Prasad & Christopher M Towe & Zeine Zeidane, 2015. "Islamic Finance; Opportunities, Challenges, and Policy Options," IMF Staff Discussion Notes 15/5, International Monetary Fund.

    More about this item

    Keywords

    central bank monetary policy and regulations; Financial Institutions; Globalisation; slamic finance;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L4 - Industrial Organization - - Antitrust Issues and Policies

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