This study looks at the financial exclusion of less affluent UK Muslims before and since questions about the social benefits that Islamic banks have brought to those on low incomes. The impact of the introduction of Islamic banking in enhancing the financial inclusion level of low income Muslims in assessed.

Abstract The role of Islamic finance in tackling financial exclusion in the UK As the fundamental principles of Islamic finance are socio-economic justice and benevolence (Al-Adle Wal-ihsan), some commentators have raised serious questions about the social benefits that Islamic banks have brought to those on low incomes. This research involves an empirical study looking at the financial exclusion of less affluent UK Muslims before and since Shari?a compliant finance was introduced. The impact of the introduction of Islamic banking in enhancing the financial inclusion level of low income Muslims is assessed. The main findings of the research are that the majority of UK Muslims are financially excluded due to the absence of banking products that would meet their needs and would also comply with Shari?a. The research also found that although UK Muslims have a preference for Shari?a compliant finance, the Shari?a compliant financial products currently on offer did not significantly enhance their financial inclusiveness. According to the research findings, the main reasons for the low take-up of the existing Shari?a compliant financial products relate to the strong skepticism about the authenticity of such products. Similarly, affordability, acceptability and accessibility of these products remained a real cause for concern for most of the less affluent UK Muslims. The research concluded that the providers of Shari?a compliant finance need to redesign their current provision to make it more relevant to the financial services needs of the less affluent UK Muslim communities. The research further suggested that Islamic micro-financing schemes should be set up by mainstream financial institutions to cater for the financial services needs of the less affluent UK Muslims. Strong coordination between governmental institutions tackling financial exclusion, providers of Shari?a compliant financial products and local community developmental organizations was also recommended.

This book provides two important contributions to existing theories in the financial innovation literature. First, it extends the existing literature of innovation orientation to a completely new field and construct that is based on a religious imperative as a framework within which financial innovation is constrained. It explains how an innovation orientation in IFIs can be directed within religious rules, which indicates that innovation orientation in IFIs is a learning philosophy. Second, the book introduces and examines the plasticity of Shariah as a shared boundary object and its dynamic role in managing tension and conflicting values in the financial innovation process. Furthermore, building on the empirical results, the study illustrates the insights that each theoretical lens affords into practices of collaboration and develops a novel analytical framework for understanding religious orientation towards financial innovation. This practical contribution, of the developed framework, could form the basis for a standardised framework for the Islamic finance industry. The book concludes by noting the policy and managerial implications of its findings and provides directions for further research.

Highlighting the impact of current globalization on financial markets, this topical book challenges the universality of Western property rights and interprets Islamic finance in Europe as part of a plural financial system, where different conceptions of economic justice(s) co-exist and influence each other. The contributing authors analyse key economic development and social integration issues from an Islamic perspective and outline the European approach to accommodating Islamic finance, with particular regard to the peculiarities of individual nation-states. Set in this context, the book presents financial pluralism as a device to enhance a level playing field in the global marketplace, as well as to foster a plural open society. Providing a comprehensive and methodological guide to Islamic finance in Europe, this book will prove an illuminating and informative read for academics, students and policymakers with an interest in the impact on financial regulation of an increasingly globalized world.

The SDN discusses the main policy issues and challenges in building an inclusive and safe Islamic finance industry, with emphasis on Islamic banking and Sukuk markets. To this end, it discuses why Islamic finance matters, taking into account its recent and prospective growth; and, its potential contributions in terms of financial inclusion, support for small- and medium-sized enterprises and investment in public infrastructure and, in principle, reduced systemic risk. It then covers a range of regulatory and other challenges, and offers policy advice, to address factors that hamper the development of the industry and, more generally, the delivery of its potential benefits. The paper covers regulatory and supervisory issues, safety nets and resolution frameworks, access to finance, Sukuk markets, and macroeconomic policies.

This paper discusses the impact of the rapid adoption of artificial intelligence (AI) and machine learning (ML) in the financial sector. It highlights the benefits these technologies bring in terms of financial deepening and efficiency, while raising concerns about its potential in widening the digital divide between advanced and developing economies. The paper advances the discussion on the impact of this technology by distilling and categorizing the unique risks that it could pose to the integrity and stability of the financial system, policy challenges, and potential regulatory approaches. The evolving nature of this technology and its application in finance means that the full extent of its strengths and weaknesses is yet to be fully understood. Given the risk of unexpected pitfalls, countries will need to strengthen prudential oversight.

Although Islamic finance is one of the fastest growing segments of emerging global financial markets, its concepts are not fully exploited especially in the areas of economic development, inclusion, access to finance, and public policy. This volume is to improve understanding of the perspective of Islamic finance on economic development, social and economic justice, human welfare, and economic growth.