The development of Islamic finance: Egypt as a case study
| Published date | 02 January 2009 |
| Date | 02 January 2009 |
| DOI | https://doi.org/10.1108/13685200910922660 |
| Pages | 74-87 |
| Author | Sherin Galal Abdullah Mouawad |
| Subject Matter | Accounting & finance |
The development of Islamic
finance: Egypt as a case study
Sherin Galal Abdullah Mouawad
Faculty of Economics and Political Science, University of Cairo, Giza, Egypt
Abstract
Purpose – The purpose of this paper is to analyze the political and economic dilemma that Islamic
finance (IF) poses on some Muslim Governments of either encouraging or restraining this global
phenomenon; in spite of their awareness of the developmental role that IF plays. Egypt, in this concern
represents a peculiar example where government’s policies apparently determine the performance of
Islamic financial institutions.
Design/methodology/approach – The paper begins with an overview of IF and the momentums
that catalyzed the development of IF in general and in Egypt in specific. It then analyses the policies of
the Egyptian Government towards Islamic financial institutions since its inception in 1963 until 2007,
with a specific focus on Islamic banks and Islamic companies. This is followed by a discussion on the
current practices of these institutions in the Egyptian economy. Finally, the paper presents a prospect
vision of the future path of Egypt in the field of IF.
Findings – The paper finds that the shares of IF in the Egyptian economy are modest at local,
regional and global levels. Such backward position could be justified in the light of the governmental
policies and their manipulation over the legal, economic and religious institutions in a way that
restrain the performance of Islamic financial institutions. However, the responsibility is not solely the
government’s; Islamic financial institutions share part of such retreat due to their practices that divert
them from their mission.
Practical implications – The paper concludes that the nature of the Egyptian Government’s
attitudes towards IF stems from its tendency to maintain the stability of its economic system besides
its suspicion to the nature of Islamic financial institutions and their links with Islamist groups.
In addition, Islamic financial institutions suffer from administrative and legal problems that shape
their practices and reveal their divergence from their Islamic and developmental role that they are
supposed to play.
Originality/value – In the final analysis, the paper offers an insight into prospective development of
IF in Egypt on both local and external levels.
Keywords Islam, Finance,Banking, Egypt
Paper type Research paper
Introduction
Islamic finance is rapidly evolving and expanding, with growth of banking assets estimated
at $750bn and growing at a rate of 15per cent to 20per cent a year (Shoaib, 2007, p. 2).
Islamic finance (IF) is emerging at a rapid pace[1]. Since the first experiment of
MitGhamr Bank (MGB) in Egypt in 1963, Islamic financial services have become
increasingly attractive to over 1.6 billion Muslims across the world (Jung, 2007). Such
dramatic growth has stretched well beyond the Muslim countries, in a way that it is
becoming a global financial force, which cannot be ignored (Jung, 2007). The
importance of IF stems from its ultimate objective of achieving socioeconomic
development and social justice among different groups in society. However, the rise of
IF has posed a dilemma for Muslim Governments of either accepting or restraining this
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1368-5201.htm
JMLC
12,1
74
Journal of Money Laundering Control
Vol. 12 No. 1, 2009
pp. 74-87
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685200910922660
To continue reading
Request your trial