Islamic Finance for European Muslims: The Diversity Management of Shari`ah-Compliant Transactions
AbstractThis Article argues that developments in Islamic finance must be analyzed within a broader framework. First, Islamic financing transactions must be integrated with and adapted to the overall legal and regulatory framework of the prospective jurisdiction in which the transaction will take place. Islamic financial services, in most jurisdictions, are subject to state law. Integrating and adapting transactions is of particular importance with regard to retail products that are based on an industrialization of the banking business. In Germany, regulation works differently from the UK and may be less susceptible to catering to the needs of ethnic and religious minorities. Second, and perhaps more inportantly, Shari'ah-compliant retail products must also mirror the needs of the respective Muslim communities they serve. While there may be a global market for "big ticket" Islamic financing transactions, this is not the case for retail products, which are not based on globally uniform standards. What is deemed to comply with Islamic principles will depend on who interprets them and in which jurisdiction the transaction is implemented. Therefore, the success of Islamic retail products depends on a double cultural accommodation: adjusting the respective product to both the requirements of local laws and the specificities of local Muslim communities. This depends on certain institutional arrangements that, in the past, have been more favorable in the UK than in Germany.