The financing of Islamic entities and its applicability to Malta : a study

Abstract

This dissertation is intended to fulfil two objectives which are to ascertain the major considerations in the application of IF and to determine the extent to which these considerations apply within the Maltese scenario. Both primary and secondary data were collected for this dissertation. Secondary data was obtained from books, newspaper articles, websites, online academic papers, online books, online documented speeches and online documents issued by governmental bodies. The personal interview method was used for primary data collection. A total of ten semi-structured interviews were conducted with ten different people. The interviewees are divided into two groups. The first group includes those working in sectors which would come across Islamic finance, if it is introduced in Malta. The other group included others experts with knowledge about Islamic finance. This study has found that the main considerations that need to be taken into account when applying Islamic finance relate to human resources, financial regulation and auditing, taxation, financial rulings, the ethical dimension of Islamic finance and the market. Relating to these areas, it was found that there is a need to deal with the shortage of human resources in the sector. There is, also, the need to develop a strong financial regulatory framework in the area of Islamic finance in order to build a strong reputation. This could partly be done by achieving more standardisation of Shari'ah rulings. The creation of a level playing field in the area of taxation is, also, deemed important. Moreover, it appears that there is a lack of consensus about the target market Malta should try to penetrate. This, too, has to be addressed. It is hoped that this study gives an adequate overview of what Islamic finance is about and what the introduction of Islamic finance entails. Among its recommendations, one finds the need for a more unified approach towards the introduction of Islamic finance in Malta (this should involve all parties concerned, including tax specialists) and more emphasis on education and training in order to deal with the human resource shortage.