The world banking crisis may have been averted if the principles of Islamic finance had been followed, a university conference heard.
Business leaders, academics and finance managers from across the North West and London gathered at the University of Bolton for the launch of the University’s Centre for Islamic Finance. They heard from Dr Ahmed Mohammad Ali, president of the Islamic Development Bank, who spoke of the ‘ethical and moral’ dimension of Islamic finance.
He said: ‘We want to ensure greater justice in the financial system. The sale of debt is prohibited and we do not pass on risk to an unsuspecting third party. This prevents excessive lending.’
The charging of interest is prohibited by Sharia law and instead joint ventures and profit sharing are the driving forces of Islamic finance deals.
Dr Ali said the Islamic Development Bank itself is growing at the rate of 35 to 40 per cent each year, lending 81 billion US dollars to member countries and he predicted that in the next decade Islamic finance would capture between 15 to 20 per cent of the world banking industry business. Over one trillion US dollars will have been loaned by the end of this year across 56 countries.
The Centre for Islamic Finance will facilitate and promote research into Islamic finance and aims to have a number of research staff and students working on this as soon as possible. Starting from the new academic year, it will also put on lectures and workshops for the public, as well as postgraduate courses. Its first PhD student is expected to join the Centre in July.
Students at the University will be able to take postgraduate masters degrees to give them a greater understanding of the cultural and financial forces which drive Islamic banking.
Vice Chancellor, Dr George Holmes, said the University has its own overseas campus in the UAE and that all universities had increasingly become more international and global organisations.
Dr Holmes, an economist added: ‘We have got closer to our friends in the Middle East and started to understand how they do business. It is about Islamic belief on the way they see the world – primarily not profiteering at someone else’s expense and having due diligence about the way you deal with lending and borrowing.
‘Those two seem very relevant given the world economic context. Had we been a little bit more diligent we wouldn’t be in the state we are today.’
Dr Ali had earlier met the Lord Mayor of London, David Wootton, and the Secretary of State for International Development, Andrew Mitchell, in the capital. Former Chancellor, Lord Lamont, has also agreed to sit on the board of the Centre for Islamic Finance in Bolton.
Speaking about the choice of the University of Bolton, Dr Ali added: ‘I am highly confident that the establishment of this centre will boost innovation, research and ultimately give benefit to society by the understanding of Islamic finance.’
The centre will be led by Dr Mohammed Abdel-Haq, a British Jordanian who sits on the Council of Chatham House and is a founding member of a London merchant bank. He was also Managing Director and Global Head of Private Islamic Banking at HSBC Amanah.
He said there was a need for such a centre of learning to combat the lack of understanding and misrepresentation of Islamic finance.
Speaking about Bolton, he added: ‘The people in this town are warm and welcoming. I am confident they will embrace new ideas especially given their rich history in the industrial revolution.’
Pictured from left: Vice Chancellor Dr George Holmes, His Excellency Ahmed Mohammed Ali, Professor Mohammed Kayed Abdel-Haq, The Baroness Morris of Bolton OBE DL DPhil LLD, Chancellor of the University of Bolton.