Islamic Finance
Enoabasi Ekanem
Phillip Young
FIN 361
& 402
Dr. Juli-Ann Gasper
March 28, 2002
Table of Contents
Title
Page 1
Table
of Content 2
Executive Summary 3
Introduction 4
The
Main Features of Islamic Finance 5
Principals
of Islamic Finance 5
Changing Times 6
Individuals Making a Difference 6
Problems Facing Islamic Finance and their Solutions 7
Growth and World Recognition of Islamic Finance 8
Islamic Business Ethics and Business Cultures 8
Islamic Countries and their Business
Cultures 10
Conclusion 16
Appendix 1 17
Glossary 25
References 26
Executive Summary
We live in an interdependent,
global world where an understanding of other cultures and their financial
system are essential. With global
expansion, it has become even more important that we increase our understanding
and respect of the world’s diverse cultures. In order for our new world to
thrive, it is important that we help students and entrepreneurs to realize the
importance of culture and financial system in the Islamic world.
The purpose of this paper is
to provider a better understanding of Islamic Finance and Islamic Ethics. We
shall also discuss the business cultures of Indonesia, Lebanon and Nigeria. We
believe that entrepreneurs will find these topics interesting because
currently, there are vast opportunities available for entrepreneurs who are
planning on establishing or invest in many Islamic developing countries, from
oil to textiles industries; that is why entrepreneurs should know how the
Islamic finance system works in order to be able to join the market
competitively. Moreover, as the world is getting smaller we believe that today
is the time to know and understand each other’s cultures in order to avoid
stereotypes, conflicts and misunderstandings between cultures (Western and
Islamic cultures).
As international students, we better understand foreign cultures. Through out the paper we will contribute our knowledge as well as those of professional to support the issues we discuss. We gathered our resources from websites, journals and books (reference lists). We also provided some personal examples from friends and family to better understand the issues we discuss in this paper and for our data analysis.
Our paper first provides some
features on Islamic finance. One of our concentrations of study in this report
is the interest issue, where depositors neither pay nor receive any interest
from the bank because this rule is part of the Islamic set of rules called
Shariah. This paper also covers in detail, Islamic ethics. Islamic ethics
derives from the teachings of the Qu’ran, which Muslims believe is the book
revealed by God to Muhammad and from the Sunnah, the recorded saying and behavior
of Muhammad. As a result of our research we found out that there are three
guidelines in conducting an ethical business (1) unity (tawhid), (2) justice
(adalah) (3) trusteeship (khilafah). Moreover, in order for this paper to be a
useful tool to students and to entrepreneurs who are planning to establish a
business in Islamic countries, we provide three predominately Islamic
developing countries with their backgrounds and cultures. We provide
information on how Islamic businessmen and businesswomen greet each other, make
decisions, organize meetings, entertain their clients or customers, their views
on women and some suggestions on appropriate business attire. Our purpose in
providing this information is to help reduce misunderstanding between cultures
and increase awareness that each Islamic country is different.
We feel that our research is
an essential tool for students and entrepreneurs who want to know about Islamic
entrepreneurship and Islamic cultures. We believe that this report can help
students and entrepreneurs understand these issues. We recommend that an
entrepreneur who wants to establish a business in an Islamic country must have
enough knowledge and understanding of their financial system, ethics and
culture in order to be successful.
Introduction
Islamic
finance is finance that adheres to the teachings of Islam, the Muslim religion.
The guiding principles for the Islamic financial system are a set of rules and
laws, collectively referred to as Shariah (Shariah Guidelines), guiding economic, social,
political, and cultural aspects of Islamic societies. Shariah originates
from the rules dictated by the Quran and its practices, and explanations
rendered (more commonly known as Sunnah) by the Prophet Muhammad.
Further elaboration of the rules is provided by scholars in Islamic
jurisprudence within the framework of the Quran and Sunnah. In a sense, the
combination of law and finance in Islam is inevitable.[1] In practice, Shariah means that Islamic finance is asset backed,
so the foundation of Islamic banking is asset management. Once the basic tenet
of Islamic finance (i.e., the prohibition of riba, or interest) is understood,
the most common activities are no different to those undertaken by many
conventional banks.[2]
In
the last twenty years the Islamic world has embraced the move towards a global
economy. They want to be a part of the modern economies and are making steps to
arm themselves with the necessary equipment to compete with the rest of the
world. As a result Islamic financial institutes have began to look for ways to
provide a broader range of financial services, and products to its people that,
are Shariah compatible and yield equally high returns as their counterparts
around the world.
Islamic Finance is an up and coming discipline and is constantly changing. As a result there is a lot of uncertainty about how to teach it, understanding it and the concepts behind it, how to do business with this method of finance, etc. In spite of this, it is gaining wide spread recognition around the world as more and more people recognize it as a form of finance as well as the benefits of working with Muslim business men and women.
Investment in companies with core activities linked to
alcohol, pork, insurance, gambling, tobacco, pornography and the arms trade are
not allowed. Companies with a high debt to equity ratio are also excluded
although some leeway is allowed through dividend cleansing i.e. if some income from interest-bearing accounts
is included in the income of the company; the proportion of such income in the
dividend paid to the shareholder must be given to charity, and must not be
retained by him. According to many prominent Islamic Fund companies, a Muslim
investor cannot invest in the shares of a company if the non-Shariah
compliant sources of income contribute 5 percent or more of the company's total
income.
Entrepreneurs who
intend to do business in Islamic countries must have a basic understanding of
the business cultures of the people he or she will be doing business with. Thus
in the second part of this paper we lay out the basic Islamic ethical
guidelines the entrepreneur can follow in order to know and better understand
Islamic Entrepreneurship. We believe that this is also important because many
businesses today, whether they are Islamic or not run their business in
unethical ways. We strongly believe that a successful business must be run with
strong ethical values.
The Main Features
of Islamic Finance
Principals of Islamic Finance
Making Money from Money is not Permissible
Prohibition of Interest
Profit and Loss Sharing
Gharar (Uncertainty or Speculation) is
Prohibited
Investments Should only Support Halal
Activities
In Islam, Muslims are prohibited to deal with interest (riba), give
it, receive it or even witness it. As a result Islamic banks cannot pay
interest to depositors nor receive interest from burrowers. They cannot even
witness or keep accounts that include interest-charging transactions. Here is
the reason why. Conventional financial systems focus primarily on the economic and
financial aspects of transactions; the Islamic system places equal emphasis on
the ethical, moral, social, and religious dimensions, to enhance equality and
fairness for the good of society as a whole. The system can only be fully
appreciated in the context of Islam's teachings on the work ethic, wealth
distribution, social and economic justice, and the role of the state.
The only time lending money is not prohibited in Islam is when
value is being created (hence backed by assets). If I burrow money for a
venture, the lender and I have to share the profits and losses fairly according
to Shariah Law--this is known as mudaraba. If the venture is profitable then we
both share in the profits. If the venture fails then we share the loss in the
same way. In conventional finance this is not the case. The borrower has to pay
a fixed rate of interest as well as the principal whether or not the venture is
profitable. If the venture makes a profit then the lender only gets a fixed
percentage, which is governed by supply and demand and not on the actual
profits produced from the venture. This rate of return might not be a
reasonable portion for the lender, which is a form of injustice. If the venture
fails then the lender has to pay interest to the lender as well as the
principal, which means the interest of the lender is guaranteed at the price of
the destructive loss of the borrower, which again is a gross injustice.
As a result financing a business on the bases of interest cause s
an unbalanced atmosphere and brings injustice to either party depending on the
success or failure of the venture. On a large-scale interest based economies
create a debt-oriented economy.
Here is an opinion from an Islamic investor’s point of view.
Interest is not healthy for an economy. For once interest is allowed, and
advancing loans, in itself, becomes a form of profitable trade, the whole
economy turns into a debt-oriented economy, which not only dominates over the
real economic activities and disturbs its natural functions by creating
frequent shocks, but also puts the whole mankind under the slavery of debt. It
is no secret that all the nations of the world, including the developed
countries, are drowned in national and foreign debts to the extent that the
amount of payable debts in a large number of countries exceeds their total
income. Just to take one example of UK, the household debt in 1963 was less
than 30% of total annual income. In 1997, however, the percentage of household
debt rose up to more than 100% of the total income. It means that the household
debt throughout the country, embracing rich and poor alike, represents more
than the entire gross annual incomes of the country. Consumers have borrowed,
and made purchases against their future earnings, equivalent to more than the
entirety of their annual incomes. Peter Warburton, one of the UK's most
respected financial commentators and a past winner of economic forecasting
award, has commented on this situation as follows: "The credit and capital
markets have grown too rapidly, with too little transparency and
accountability. Prepare for an explosion that will rock the western financial
system to its foundation."[3]
Changing Times
Twenty years ago
Muslims were content with a place to put their money. Now with the rise of
sophisticated investors, investments are made in what will maximize wealth, and
still comply with Shariah Law. As a result Shariah compliant banks have to
offer more products in order to reach more of the Muslim world as well as stay
competitive with other international financial institutions. The largest demand
for Islamic finance comes from the Arab world but only 20% of the population
presently uses this type of banking. So as you can see, there is room for
potential profits. International banks like Citibank, HSBC, BNP Paribas, and locally
based institutions such as Arab Banking Corporation (ABC), have launched
Islamic offshoots. Many others are also doing the same thing but have chosen to
do so through separate Islamic branches rather than windows in their existing
offices so as to keep the two operations separate. Oversees markets are the
popular choice when it comes to investments because they have been barely
tapped of their resources thus the abundance of opportunity. e.g. the more
securities you invest in from different countries reduces your systematic risk
as well as reduce the amount of risk you are exposed to in trying to achieve a
certain rate of return. I.e. it moves the efficient frontier curve to the left.
Individuals
Making a Difference
Atif Abdulmalik an
innovative manager is transforming Islamic banking. Abdulmalik, chief executive
of First Islamic Investment Bank, travels between such cities as Houston and
the bank's modern headquarters in Bahrain's capital selling the bank
aggressively. In the past four years, he has helped stretch the boundaries of
Islamic investment significantly. Now Gulf nationals can invest in private
equity in the US. This has been deemed acceptable under the Shariah (Islamic)
code of law since it involves holding physical assets. Convenience as well as
demand is a factor of their success. By doing the homework and attaining
investments that are Shariah compliant they save the Arab investors from having
to search for them. Abdulmalik is tweaking the tail of Investcorp, a
long-established and highly successful conventional firm that specializes in
finding international private-equity investment from the Gulf for deals in Europe
and the US. Abdulmalik and several senior executives left Investcorp in 1997
when First Islamic was set up. Their ability to tap this new market so quickly
- First Islamic has nine ventures in the US to the value of $800 million and
has already exited successfully from two projects shows the enormous
versatility of the business.
It is a venture with
vast potential. Islamic banking has grown from nothing to a $200 billion
industry in little more than a decade. Adnan Al-Bahar, chief executive-elect of
the newly merged Albaraka & The International Investor, says: "There
are millions of customers in 75 countries and in some states it has a 30%
market share. With an annual growth of 15% it is outstripping the growth in
conventional markets. In the face of globalization, consolidation and fierce
competition, many Islamic banks now rank among the top three in their
markets." [4]
Problems Facing
Islamic Finance and Their Solutions
Without
standardization Islamic Finance cannot become a serious competitor in world
financial markets. Right now Shariah courts decide the rules of Islamic
Finance. This in and of itself is a problem because Islam differs slightly from
country to country. It is only normal as we are all different, with different
histories, so it stands to reason that our religions should differ too, due to
differing cultures and traditions etc. The solution to this would be to have a
supreme Shariah Court.
In spite of these
differences some progress is being made. One important development is the
expected creation of an Islamic Financial Services Organization, comprising of
the central banks in south-east Asia, the Middle East and north African states;
the bases of most Islamic banks. Their task is to define common standards of
measuring risk so it is possible to define prudential standards on capital
adequacy, while maintaining standards on the 200 or more Islamic banks and
financial institutions. A key role in this process is being played by the
Bahrain-based Accounting and Auditing Association for Islamic Financial
Institutions (AAOIFI). This has already introduced accounting standards for the
banks and has now produced five standards and four rules to develop instruments
to ensure short-term liquidity and develop investable instruments that will
deliver comparable rates of return to those available in traditional markets.
Methods to best incorporate their culture and traditions into their
business dealings and interactions are constantly evolving. The Islamic Banking
and Finance Division (IBFD)—a part of the
Islamic Research and Training Institute, a branch of the Islamic Development
Bank Group was created to research and develop models for the application of
Shariah in the field of banking and
finance. They also extend training facilities to the officials of member
countries of the ISDB engaged in the field—they do so by contracting scholars,
organizing conferences, seminars, courses, and lectures. Some institutions are
teaching Islamic banking as part of their degree programs but there are no
books in which to draw from. Students and teachers alike, use material from
several places. Since this is not a suitable method of learning IBDF has began
working on two books: i) Fundamentals of Islamic Banking; ii) Islamic Banking
Past, Present, and Future. For the time being they are putting together
training manuals and modules—this will at least provide some consistency among
those seeking knowledge in this field.
Because of their high growth rate another problem Islamic Finance
faces is short-term liquidity. This issue of short-term liquidity will
eventually be resolved as more "Islamically" compatible products are
developed. The Bahrain
Monetary Agency (BMA) has led the way in the last year by issuing the first leasing
(Ijarah) securities and has begun to
issue $25 million a month of “Islamically” structured short-term government bills.
"Bahrain is also moving ahead with another pioneering project to establish
a liquidity management company, which will create an international Islamic
financial market to help provide short-term liquidity," says Shaikh Ahmed.
fine the basic Islamic contracts, an area formerly the preserve of Shariah
courts.
Growth and World Recognition of Islamic Finance
“Egyptian Coptic Christian
community banks like the high quality of service. In Malaysia, the good rates
of return appeal to Chinese businessmen. And in Europe the socially aware may
find the ethical credentials attractive. Islamic banking's appeal is indeed as
broad, if not broader, than that of secular commercial banking.”[5]
It is a new venture
if you will and is gaining support and will eventually take off. It is not just
about putting your money in a place that adheres to Shariah but in investments
that will provide a high rate of return. Even the trend towards companies being
more socially responsible is in their favor because social responsibility is
already engrained in their business structure. This makes them even more
attractive to local as well as foreign investors.
A number of
companies, including Kuwait's TII, provide a growing body of information on
shares that are “Islamically” acceptable, and the major development in the past
year has been to establish Islamic indices that offer benchmarks for investors.
Dow Jones has set up an Islamic market index of Goo stocks and FTSE
International has put together a similar index in conjunction with TII. Today
there are several dozen equity funds, including global, market-neutral,
emerging markets and leasing. Successful funds in recent years have included
the Al Dar Islamic European Equities Fund, which has regularly outperformed the
sector index. In the United States, there are a number of funds, including the
Wafra-BBH Dow Jones Islamic Market Index Fund. [6]
There is great
potential for development in the Islamic world.[7]
It is growing at a rapid rate and is ready for people to take advantage of the
opportunities available. The prize is great. There are 1.2 billion Muslims
ready to invest, so long as they can make a decent return.
Islamic
Business Ethics and Business Cultures
To help make this project useful to future entrepreneurs and
students that are interested in this topic we shall further discusses Islamic
business ethics as well as some business cultures in some Islamic countries.
These little bits of knowledge will enable the entrepreneur to better
assimilate into the cultures of the countries we will discuss through the
course of the paper.
Islamic business ethics derives from the teachings of
the Qur’an, which Muslims believe is a book revealed by God to Muhammad and
from the Sunnah, the recorded sayings and behaviors of Muhammad. The Islamic
worldview focuses on the development of both the material and spiritual
dimensions of the universe and of human life in a balanced way. The goals of
Islam are to build better individuals, and create social and material
conditions that ensures peace, justice and freedom to all.
According to Gillian Rice, Islamic business ethics have
three guidelines in conducting business:
i)
Unity (tawhid)—refers to two views; the view that God
is the sole creator of the universe and everyone is equal, hence the need to
treat each other as brothers and sisters. In terms of business, this refers to
cooperation and equality of effort and opportunity. e.g. The Gurage, an
Ethiopian Muslim tribe, are the main small businessmen in Addis Ababa, the
capital city of Ethiopia. These small businesses are mainly comprised of
grocery kiosks and small-scale supermarkets. The Gurages are there first thing
in the morning and are open late into the night. They are known for being hard
workers. These businesses are family owned. They look out for each other and
will hire a family member as an apprentice, so he or she can learn the business
and then later on open their own. This combination of hard work, sticking
together, and helping each other out has made them the largest group of businessmen
in Addis Ababa.
ii)
Justice
(adalah)—refers to the treatment of
individuals and society as a whole. An individual who acquires wealth
need not lie or cheat but instead maintain promises and contracts. Muslims
encourage sharing wealth with other Muslims. Zakah “is an obligatory form of
‘charity’ expected from every Muslim individual.”[8]
Muslims view wealth not as an economic necessity but also a spiritual salvation
“…from your wealth take alms so that you might purify and sanctify.” Qur’an
9:103. We believe that entrepreneurs need to know about Zakah because many huge
companies always practice Zakah. Therefore, it is the entrepreneurs’
responsibilities to at least know what Zakah is, as we mention in this report.
iii)
Trusteeship
(khilafah)—refers to people as a responsible and honest society. Muslims stress
the belief that resources are for the benefit of everybody hence, wasteful
consumption (israj) is discouraged, while avoiding waste and saving wealth for
the purpose of direct investment (istithmar) are encouraged. Zakah is another
good example of being responsible to society. e.g. The Hausa are a major
Islamic tribe in Nigeria. They are renowned for their honesty and are the major
lords of the black market in Nigeria. Because the Muslims do not put their
money in banks this tribe acts as a “bank”. There is no form of security should
they decide to misuse the funds, yet this system among the Muslims has thrived
through out the ages. It is a known fact that if you do business with the Hausa
you will not get “jilted”. My mom (Eno’s) can vouch for them. Some years back
when we were building our home in the village, we had $20,000 to change into
Naira (the Nigerian currency). Try counting $20,000 by hand let alone in Naira
with an exchange rate of 100 Naira to a dollar. In short they changed the money
for her and she paid them and left. There was no way to count it and should she
have discovered that all the money was not there, there would have been nothing
she could have done. But all the money was there. To run a business on this
kind of scale requires honesty and decency because if people can trust them
then their business will strive—as it is doing so.
The three guidelines may have little contrast to Jewish and
Christian beliefs but many other ethical principles are also universal to
non-Muslims like honesty, trustworthiness and integrity. On the other hand,
legal rulings concerning business trading and commercial dealings, both Muslims
and Non-Muslims share the same values e.g., it is unlawful to illegally
embezzle company funds. The Islamic ethical principles should not be difficult
for non-Muslims to understand for one main reason, Islamic ethical principles
are closely related to those of Christianity and Judaism. Business cultures
also vary from country to country whether a country is predominately Islamic or
not, each country exemplifies unique business cultures.
Please Open
Islamic Countries and Their Business Cultures
Conclusion
We strongly recommend that an entrepreneur must know and understand
how Islamic finance work before establishing a business in an Islamic country.
Moreover, to become a better and successful entrepreneur, one must also know
and understand the basic Islamic business ethics and some background on Islamic
business cultures so that they may have a strong business but also be able to
communicate effectively and clearly to other Muslim businessmen and women.
We feel that the research and conclusions we have provided are
useful tools to entrepreneurs and students who are interested in knowing and
understanding Islamic Entrepreneurship. We hope that our paper provides future
entrepreneurs with the knowledge and basic understanding of Islamic finances as
to successfully enable them to do business in Islamic countries.
Appendix 1
RELIGIONS OF THE WORLD:
Religious makeup of each country
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In the table
below:
|
|
Numbers are
shown as percentage of the total population. 1,2 |
||||||||||||||||||||||||||||||
|
|
The following
abbreviations are used:
|
||||||||||||||||||||||||||||||
|
|
Data should
be taken with a grain of salt:
|
||||||||||||||||||||||||||||||
|
|
Data is based
on self-reporting. That is, if a person considers themselves to be a
Christian, they are counted as a Christian. Various religious groups use
other criteria for membership. |
|
Country |
Formal Name |
Religious Makeup |
|
Afghanistan |
Islamic State
of Afghanistan |
Su 84; Sh 15 |
|
Albania |
Republic of
Albania |
M 70;
Albanian O 20; R 10 |
|
Algeria |
Democratic
and Popular Republic of Algeria |
Su 99* |
|
Andorra |
Principality
of Andorra |
Mainly R |
|
Angola |
Republic of
Angola |
I 47; R 38; P
15 |
|
Antigua and
Barbuda |
Same |
Mainly Anglican
P |
|
Argentina |
Argentine
Republic |
R 90 |
|
Armenia |
Republic of
Armenia |
Armenian O 94 |
|
Australia |
Commonwealth
of Australia |
Anglican 26;
R 26; Other C 24 |
|
Austria |
Republic of
Austria |
R 85; P 6 |
|
Azerbaijan |
Azerbaijan
Republic |
M 93; O 5 |
|
The Bahamas |
The Commonwealth
of the Bahamas |
Baptist 32;
Anglican 20; R 19; Other C 24 |
|
Bahrain |
State of
Bahrain |
Sh 75; Su 25 |
|
Bangladesh |
People's
Republic of Bangladesh |
M 88; H 11 |
|
Barbados |
Same |
P 67; R 4% |
|
Belarus |
Republic of
Belarus |
0 80; R, M,
other 20 |
|
Belgium |
Kingdom of Belgium |
R 75; P &
other 25 |
|
Belize |
Same |
R 62 P 30 |
|
Benin |
Republic of
Benin |
I 70; M 15; C
15 |
|
Bhutan |
Kingdom of
Bhutan |
B 75*; H 25 |
|
Bolivia |
Republic of
Bolivia |
R 95 |
|
Bosnia and
Herzegovina |
Republic of
Bosnia and Herzegovina |
M 40; O 31; R
15 |
|
Botswana |
Republic of
Botswana |
I 50; C 50 |
|
Brazil |
Federative
Republic of Brazil |
R 70 |
|
Brunei |
State of
Brunei Darussalam |
M 63*; B 14;
C 8 |
|
Bulgaria |
Republic of
Bulgaria |
Bulgarian O
85; M 13 |
|
Burkina Faso |
Same |
M 50; I 40; C
10 |
|
Burma: see Myanmar |
|
|
|
Burundi |
Republic of
Burundi |
R 62; I 32; P
5 |
|
Cambodia |
Kingdom of
Cambodia |
B 95 |
|
Cameroon |
Republic of
Cameroon |
I 51; C 33; M
16 |
|
Canada |
Same |
R 45; United
12; Anglican 8 |
|
Cape Verde |
Republic of
Cape Verde |
R 96 |
|
Central
African Republic |
Same |
P 25; R 25; I
24; M 15 |
|
Chad |
Republic of
Chad |
M 50; C 25; I
25 |
|
Chile |
Republic of
Chile |
R 89; P 11 |
|
China |
People's
Republic of China |
Officially
atheist; B & T common; M, C rare |
|
Colombia |
Republic of
Colombia |
R 95 |
|
Comoros |
Federal Islamic
Republic of the Comoros |
Su 86; R 14 |
|
Congo
(formerly Zaire) |
Democratic
Republic of the Congo |
R 59; P 20; M
10; Kimbanguist 10 |
|
Congo
Republic |
Republic of
the Congo |
C 50; I 48; M
2 |
|
Costa Rica |
Republic of
Costa Rica |
R 95 |
|
Côte d'Ivoire |
Republic of
Ivory Coast |
M 60; I 25; C
12 |
|
Croatia |
Republic of
Croatia |
R 77; O 11 |
|
Cuba |
Republic of
Cuba |
R 85% (old
data) |
|
Cyprus |
Republic of
Cyprus |
Greek O 78; M
18 |
|
Czech
Republic |
Same |
A 40; R 39; P
5; O 3 |
|
Country |
Formal Name |
Religious Makeup |
|
Denmark |
Kingdom of
Denmark |
EL 91 |
|
Djibouti |
Republic of
Djibouti |
M 94; C 6 |
|
Dominica |
Commonwealth
of Dominica |
R 77; P 15 |
|
Dominican
Republic |
Same |
R 95 |
|
Ecuador |
Republic of
Ecuador |
R 95 |
|
Egypt |
Arab Republic
of Egypt |
M 94; C &
other 6 |
|
El Salvador |
Republic of
El Salvador |
R 75; some P |
|
Equatorial
Guinea |
Republic of
Equatorial Guinea |
Mainly R |
|
Eritrea |
State of
Eritrea |
M 50; C 50 |
|
Estonia |
Republic of
Estonia |
Mainly EL |
|
Ethiopia |
Federal
Democratic Republic of Ethiopia |
M 47;
Ethiopian O 37; I 12 |
|
Fiji |
Republic of
Fiji |
C 52; H 38; M
8 |
|
Finland |
Republic of
Finland |
EL 89 |
|
France |
French
Republic |
R 90 |
|
Gabon |
Gabonese
Republic |
C 80; I 19 |
|
The Gambia |
Republic of
The Gambia |
M 90; C 9 |
|
Georgia |
Republic of
Georgia |
Georgian O
65; M 11; Russian O 10 |
|
Germany |
Federal
Republic of Germany |
P 38; R 34 |
|
Ghana |
Republic of
Ghana |
I 38; M 30; C
24 |
|
Greece |
Hellenic
Republic |
Greek O* 98 |
|
Grenada |
Same |
R 53; P 33 |
|
Guatemala |
Republic of
Guatemala |
Mostly R;
some P & Mayan |
|
Guinea |
Republic of
Guinea |
M 85; C 8 |
|
Guinea-Bissau |
Republic of
Guinea-Bissau |
I 65; M 30; C
5 |
|
Guyana |
Co-operative
Republic of Guyana |
C 57; H 33; M
9 |
|
Haiti |
Republic of
Haiti |
R 80; P 16;
Vodun widely practiced |
|
Honduras |
Republic of
Honduras |
R 97 |
|
Hungary |
Republic of
Hungary |
R 68;
Calvinist 20; Lutheran 5 |
|
Iceland |
Republic of
Iceland |
EL 96 |
|
India |
Republic of
India |
H 80; M 14 |
|
Indonesia |
Republic of
Indonesia |
M 87; P 6 |
|
Iran |
Islamic
Republic of Iran |
Sh 89; Su 10 |
|
Iraq |
Republic of
Iraq |
Sh 63; Su 34 |
|
Ireland |
Same |
R 93;
Anglican 3 |
|
Israel |
State of
Israel |
J 82; M 14 |
|
Italy |
Italian
Republic |
C 98 |
|
Jamaica |
Same |
P 56; C 5;
other 39 |
|
Japan |
Same |
B/Shinto
shared 84 |
|
Jordon |
Hashemite
Kingdom of Jordan |
Su 92; C 8 |
|
Kazakhstan |
Republic of
Kazakhstan |
M 47; Russian
O 44 |
|
Kenya |
Republic of
Kenya |
P 38; R 28; I
26 |
|
Kiribati |
Republic of
Kiribati |
R 53; P 41 |
|
Korea, North |
Democratic
People's Republic of Korea |
No reliable
data; B, Confucianism, Chondogyo |
|
Korea, South |
Republic of
Korea |
C 49; B 47 |
|
Kuwait |
State of
Kuwait |
M 85 |
|
Kyrgystan |
Republic of
Kyrgystan |
Mainly Su |
|
Laos |
Lao People's
Democratic Republic |
B 60; Animist
& other 40 |
|
Latvia |
Republic of
Latvia |
Lutheran, R,
Russian O |
|
Lebanon |
Republic of
Lebanon |
M 70; C 30 |
|
Lesotho |
Kingdom of
Lesotho |
C 80; I 20 |
|
Liberia |
Republic of
Liberia |
I 70; M 20; C
10 |
|
Libya |
Socalist
People's Libyan Arab Jamahiriya |
Su 97 |
|
Liechtenstein |
Principality
of Liechtenstein |
R 80; P 7 |
|
Lithuania |
Republic of
Lithuania |
Mainly R |
|
Luxembourg |
Grand Duchy
of Luxembourg |
R 97 |
|
Macedonia |
Former
Yugoslav Republic of Macedonia |
O 67; M 30 |
|
Madagascar |
Republic of
Madagascar |
I 52; C 41; M
7 |
|
Malawi |
Republic of
Malawi |
P 55; M 20; R
20 |
|
Malaysia |
Same |
M, H, B, C |
|
Maldives |
Republic of
Maldives |
Mainly Su |
|
Mali |
Republic of
Mali |
M 90; I 9 |
|
Malta |
Republic of
Malta |
R 98 |
|
Marshall
Islands |
Republic of
the Marshall Islands |
P 63 |
|
Mauritania |
Islamic
Republic of Mauritania |
M 100 |
|
Mauritius |
Republic of
Mauritius |
H 52; C 28; M
17 |
|
Mexico |
United
Mexican States |
R 89; M 6 |
|
Micronesia |
Federated
States of Micronesia |
R 50; P 47 |
|
Moldova |
Republic of
Moldova |
O 99 |
|
Monaco |
Principality
of Monaco |
R 95 |
|
Mongolia |
Same |
Mostly
Tibetan B |
|
Morocco |
Kingdom of
Morocco |
Su 99 |
|
Mozambique |
Republic of
Mozambique |
I 50; C 30; M
20 |
|
Myanmar
(formerly Burma) |
Union of
Myanmar |
B 89; C 4; M
4 |
|
|
|
|
|
Nambia |
Republic of
Nambia |
Lutheran 50;
other C 30 |
|
Nauru |
Republic of
Nauru |
Mainly C |
|
Nepal |
Kingdom of
Nepal |
H* 90; B 5; M
3 |
|
Netherlands |
Kingdom of
the Netherlands |
C 34; P 25 |
|
New Zealand |
Same |
Anglican 24;
Presbterian 18; R 15 |
|
Nicaragua |
Republic of
Nicaragua |
R 95 |
|
Niger |
Republic of
Niger |
M 80 |
|
Nigeria |
Federal
Republic of Nigeria |
M 50; C 40 |
|
Norway |
Kingdom of
Norway |
EL 88 |
|
Oman |
Sultanate of
Oman |
M 75 |
|
Pakistan |
Islamic
Republic of Pakistan |
Su 77; Sh 20 |
|
Palau |
Republic of
Palau |
R, P,
Modekngei |
|
Panama |
Republic of
Panama |
R 85; P 15 |
|
Papua New
Guinea |
Independent
State of Papua New Guinea |
I 34; R 22;
Lutheran 16 |
|
Paraguay |
Republic of
Paraguay |
R 90 |
|
Peru |
Republic of
Peru |
Mainly R |
|
Philippines |
Republic of
the Philippines |
R 83; P 9; M
5 |
|
Poland |
Republic of
Poland |
R 95 |
|
Portugal |
Portuguese
Republic |
R 97 |
|
Qatar |
State of
Qatar |
M 95 |
|
Romania |
Same |
Romanian O
70; R 6; P 6 |
|
Russia |
Russian Federation |
25% Russian
O, 60% N, M, others ** |
|
Rwanda |
Republic of
Rwanda |
R 65; I 25 |
|
Saint Kitts
and Nevis |
Federation of
Saint Kitts and Nevis |
P 85 |
|
Saint Lucia |
Same |
R 90; P 7 |
|
Saint Vincent
and the Grenadines |
Same |
Anglican,
Methodist, R |
|
Samoa |
Independent
State of Samoa |
C 99.7 |
|
San Marino |
Most Serene
Republic of San Marino |
Mainly R |
|
São Tomé and
Príncipe |
Democratic
Republic of São Tomé and Príncipe |
R, P |
|
Saudi Arabia |
Kingdom of
Saudi Arabia |
M 100% |
|
Senegal |
Republic of
Senegal |
M 92; I 6; C
2 |
|
Seychelles |
Republic of
Seychelles |
R 90;
Anglican 8 |
|
Sierra Leone |
Republic of
Sierra Leone |
M 60; I 30;
C10 |
|
Singapore |
Republic of
Singapore |
B 32; T 22; M
15; C 13; H 3 |
|
Slovakia |
Slovak
Republic |
R 60; P 8 |
|
Slovenia |
Republic of
Slovenia |
R 71 |
|
Solomon
Islands |
Same |
Anglican 34;
R 19; Baptist 17; Other C 26 |
|
Somalia |
Same |
Su |
|
South Africa |
Republic of
South Africa |
C 68; I 29 |
|
Spain |
Kingdom of
Spain |
R 99 |
|
Sri Lanka |
Democratic
Socialist Republic of Sri Lanka |
B 69; H 15; C
8; M 8 |
|
Sudan |
Republic of
the Sudan |
Su 70; I 25 |
|
Suriname |
Republic of
Suriname |
H 27; P 25; C
23; M 20 |
|
Swaziland |
Kingdom of
Swaziland |
C 60; I 40 |
|
Sweden |
Kingdom of
Sweden |
EL 94 |
|
Switzerland |
Swiss
Confederation |
R 47; P 40 |
|
Syria |
Syria Arab
Republic |
Su 74; Other
M 16; C 10 |
|
Tiwan |
Republic of
China |
B, T,
Confucian 93; C 5 |
|
Tajikistan |
Republic of
Tajikistan |
Su 80 |
|
Tanzania |
United
Republic of Tanzania |
C 45; M 35; I
20 |
|
Thailand |
Kingdom of
Thailand |
B 95; M 4 |
|
Togo |
Republic of
Togo |
I 70; C 20; M
10 |
|
Tonga |
Kingdom of
Tonga |
Free Wesleyan
44; R 16 |
|
Trinidad and
Tobago |
Republic of
Trinidad and Tobago |
R 32; P 28; H
24 |
|
Tunisia |
Republic of
Tunisia |
M 98 |
|
Turkey |
Republic of
Turkey |
M 100 |
|
Turkmenistan |
Republic of
Turkmenistan |
M 89; O 9 |
|
Tuvalu |
Same |
Congregationalist
97 |
|
Uganda |
Republic of
Uganda |
P 33; R 33; I
18; M 16 |
|
Ukraine |
Same |
Ukranian O; R |
|
United Arab
Emirates |
Same |
M 96; C, H |
|
United
Kingdom |
United
Kingdom of Great Britain and Northern Ireland |
Anglican, R,
other C, M |
|
United States |
United States
of America |
P 61; R 23; O
1; J 1; M 1 |
|
Uruguay |
Oriental
Republic of Uruguay |
R 66 |
|
Uzbekistan |
Republic of
Uzbekistan |
M 88; O 9 |
|
Vanuatu |
Republic of
Vanuatu |
Presbyterian
37; Anglican 15; R 15, I 8 |
|
Vatican City |
The Holy See |
R 100 |
|
Venezuela |
Republic of
Venezuela |
R 96 |
|
Vietnam |
Socialist
Republic of Vietnam |
B, T, R, I |
|
Yemen |
Republic of Yemen |
Mostly M |
|
Yugoslavia |
Federal
Republic of Yugoslavia |
Serbian O 65;
M 19; R 4 |
|
Zambia |
Republic of
Zambia |
C, H, M |
|
Zimbabwe |
Republic of
Zimbabwe |
C and I 50; C
25; I 24 |
* Established as the state religion.
** From the Cambridge Factfinder 1
Although
care was taken in the preparation of this data, we cannot be responsible for
any errors or their consequences.
Glossary
Holy
Quran Holy Book of Islam
Ijara leasing
Ijtehad scholarly
opinions based on the Quran and Sunnah.
Murabaha cost-plus
riba prohibition
of interest
Salam
and Istisna prepaid orders
Shari’ah a
set of rules derived from both the Holy Quran, the authentic traditions of the
Prophet and the scholarly opinions based on the Quran and Sunnah.
Sunnah authentic
traditions of the prophet Mohammed
References
1.Gafoor,
A.L.M. Abdul, Interest-free Commercial Banking.Groningen: Apptec Publications,
1995.
2.Gafoor,
A.L.M. Abdul, Participatory Financing through Investment Banks and Commercial
Banks. Groningen: Apptec
Publications, 1996.
3 Gafoor, A.L.M. Abdul,
Commercial Banking in the Presence of Inflation. Groningen: Apptec Publications, 1999.
4.Galbraith, John Kenneth, The
Culture of Contentment.London: Sinclair-Stevenson, 1992.
5. http://www.muslimsonline.com/ief/faq.html
6. http://www.islamiq.com/knowledgecenter/
7. http://users.bart.nl/~abdul/book4ft.html
8. http://www.islamiqmoney.com/zakah_center/serv_zakah_definit.php4
9.
Tariq Al-Rifai, The Role of Venture Capital in Contemporary Islamic Finance–The
International Investor, Chicago, IL
,2001.
http://www.failaka.com/Library/Articles/VC%20in%20Islamic%20Finance.pdf
10.Financial
Management
http://www.isdb.org/english_docs/idb_home/faq/Q_FI.htm
11.
Islamic Modes of Financing and Shari’ah
http://www.isdb.org/english_docs/idb_home/faq/Q_ISM.htm
12.
Islamic Development Bank
http://www.imf.org/np/sec/decdo/isdb.htm
13.
Islamic Corporation For the Development of the Private Sector
http://www.isdb.org/english_docs/idb_home/faq/Q_ICD.htm
14.
Dr. Muhammad Nejatullah Siddiqi, Islamic Finance & Beyond: Premises and
Promises of Islamic Economics
http://islamic-finance.net/islamic-economics/eco2.html
15.
Islamic Banking and Finance Division
16.
A.L.M. Abdul Gafoor, Islamic Banking and Finance, Another Approach,
http://users.bart.nl/~abdul/book4ft.html
17.
I GO!
http://www.igo.com/Travel/Default.asp?cookie%5Ftest=1
18. Islamic Banking
http://www.alrajhibank.com.sa/instru-murabaha.htm
19. Islamic Banking
http://www.alrajhibank.com.sa/principlesislamicfinance.htm
20. Islamic Banking
Unveiled, Gordon Scott, The Banker, London, Jan 2002
21. Islamic Banking
http://www.alrajhibank.com.sa/principle2.htm
22. Islamic banks tap a
rich new business
Euromoney;
London; Dec 2001; Nigel Dudley;
23. Islamic banks tap a
rich new business
Euromoney;
London; Dec 2001; Nigel Dudley;
24. Islamic banks tap a
rich new business
Euromoney;
London; Dec 2001; Nigel Dudley;
25. Collin Willis, Treasurer, Al Rajhi Banking
& Investment Corporation
26.
http://www.islamiqmoney.com/zakah_center/serv_zakah_definit.php4
for information on how to calculate
Zakah log on to http://zakat.al-islam.com/