GRM 2010 GRM 2011

Abstract Details

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Title of Paper:
Bridging the Gulf in Islamic Finance
Paper Proposal Text :
The global economy and financial system is in search for solutions. Global financial crisis triggered by subprime crises and lately translated into Euro-zone crisis seems more of a perpetual then temporary problem. Islamic finance and Islamic economic order may have an answer to global economic and financial woes. However, the Islamic finance as an industry is still unable to provide solutions nor able to put forward a strong proposition of alternative economic order. The chief reason for this is underdeveloped system/practice of Islamic finance/banking in its own right. As the need for new approach is heightened the gulf between theoretical postulates and application of Islamic finance seems to be even more pronounced. The reasons for this are many. Among main ones is lack of institutional investors/managers that would not only create demand for products but also set standards in terms of structures, risks and returns. On the other hand, the changing geopolitical landscape in MENA region coupled with shifts in financial flows and economic growth centers provides a stage and impetus for new growth and stronger emergence of Islamic finance. However, caveat emptor, new opportunities on their own will not bear fruits should they not be coupled with new visions and decisive actions. Combining economic realities of the GCC countries and the need/opportunity for more decisive growth in Islamic finance suggests there is a scope to bridge the gap. The paper will discuss the need and rationale for establishing a major institutional investor in UAE/GCC and their role in support of the next phase of growth in Islamic finance. The focus will be on recent plans of Government of Dubai to introduce a pension/retirement scheme for expatriates in UAE. A host of benefits that such institutional investor may bring to the economy and Islamic finance industry will be discussed as well as challenges in its implementation.