THE DEVELOPMENT AND GROWTH OF ISLAMIC FINANCE IN EUROPEAN UNION

Abstract

This paper aims at capturing the latest developments and growth of Islamic finance (IF) in the European Union (EU). The study also aims at shedding light on the driving factors that have been attributed to the rise of this phenomenon in this region. Islamic finance is based on ethical principles in line with Islamic religious law. Despite its low share of the global financial market, Islamic finance has been one of this sector’s fastest growing components over the last decades and has gained further momentum in the wake of the financial crisis. The paper examines the development of and possible prospects for Islamic finance, with a special focus on European Union. It compares Islamic and conventional finance, particularly as concerns risks associated with the operations of respective institutions, as well as corporate governance. Finally, to meet these objectives, the paper utilizes historical and SWOT TOWS methodology to draw some lessons and recommendations.