Islamic banking : the pros & cons of introducing it in Malta

Abstract

Islamic banking is the world's fastest growing sector in finance and refers to banking activities that are consistent with the principles of the Shariah law, differing from the conventional banking. There are a few number of Islamic banks based in Europe, so Malta with its strategic geographical position may be able to tap a vast market and link North Africa with the rest of Europe. The study carried out has shown whether it would be an advantage or not for Malta to act as a bridge between these countries, or whether it would be feasible to introduce it to cater the local market. The research was carried out by collecting primary data through qualitative data research by e-mailing a questionnaire to executives that work and represent different sectors of the banking environment, and who are knowledgeable and involved in activities held locally regarding Islamic banking; and by collecting secondary data from various journals, books and websites. Areas that the Maltese authorities should give importance to before being totally confident that the country is more than capable of establishing Islamic banking, and the pros and cons if it would have to introduce such type of banking for both scenarios were also analysed and discussed. It was concluded that the ideal scenario would be for Malta to act as a hub between the two continents. A number of recommendations and concluding thoughts were also brought forward.