Abstract
This study provides an assessment on the current problems and progresses made in France for the introduction of Islamic banking into its economy and contains an evaluation and an analysis of the potential market for Islamic retail banks in France.
The research is divided into two distinct parts; a secondary research exposing the opportunities and the barriers for the implementation of Islamic banking in France and a primary research aiming to assess and analyze the market for such a banking system through questionnaire administration. The secondary research is concluded by a SWOT analysis (Strengths Weaknesses Opportunities and Threats) on the current situation of Islamic banking in France with the help of statistical tools used for analyzing the primary research. Analysis includes descriptive analysis, cross tabulations, correlation as well as variance analysis.
Results of the secondary research shows that France has real trumps to welcome Islamic banking into its territory and few feasible amendments are still necessary to accelerate the process. Results of primary research showed that the Muslim population responded positively to a possible opening of an Islamic bank in France. As argued in the literature review, they represent an opportunity for the introduction of Islamic banking in the country.
It also appears that Muslims use conventional banking because they lack choice and even if they did they would have chosen Islamic financing if possible. Finally, analysis of variance demonstrates that there is no link between age, sex, profession and the attitude towards Islamic banking and also there is no link between the practices of religion.
Thus, the study finds that there are trumps and a huge potential market for facilitating the introduction of Islamic banking in France. However, the amendments process has to be accelerated to optimize the success of its implementation. Also, empirical studies on the topic should be multiplied so as to encourage Islamic entities to establish in France when it will be possible.
The study also considered that the analysis conducted is not without limitations. Some of them include the fact that the thinking of the participants could not be investigated further through questionnaires; some classes are more represented than others (18-25 years range is overrepresented compared to people 40+); forecast figures are not provided; and it is not possible to assess the sincerity of the participants.
Islamic finance and more precisely Islamic banking have recently been put in the spotlight amongst the financial activities and are subject to growing interest all over the world. This new trend is partly due to is exponential growth and to the optimistic forecasts being made on those financial activities. Hence, shari'a compliant asset is estimated to have reached $951 billion at end-2008 by the IFSL Research (2010 a) which is 25% more than end-2007. Commercial and investment banks hold the most shari'a compliant assets.
Moreover, Islamic finance is predicted to reach $4,000 billion in the future. This forecast makes it even more attractive. However, despite the figures above, Islamic banking activities are still concentrated in Muslim countries such as the Gulf Cooperation Council countries, Iran, and Malaysia. Amongst Western countries, only the United Kingdom made a big move by amending its legislation to make easier the creation of the first standalone Islamic retail bank in the Western world in September 2004 (Islamic Bank of Britain 2010). With the political willingness, double tax on Islamic mortgage was removed in 2003 and tax relief on Islamic mortgage for companies was extended to individuals too.
Tags: Islamic banking, sharia law, retail Islamic banking in France
