THE BANKING SYSTEM IN THE MIDDLE EAST

Islamism is one of the most important religions in the world, according to the World Factbook of the CIA, in the year 2005 Islamism was the second religion, after Christianity, with more believers in the world, approximately 19,9% of the total world population. it is estimated that the Muslim population exceeds 1200 million people,18% of the Muslims are located in the Middle East, another 205 is located in Africa ,and 30% in the Indian subcontinent, Pakistan and Bangladesh, there are also important groups of Muslims in China, Europe, Central Asia and Russia.Converts and immigrant communities are spread all around the world.Islamism is not only important because it has millions and millions of followers, but because it has reached a lot of people and has influenced the globalization process in a number of ways. the religion has growth amazingly during the past years ,at the moment Islamism is the fastest growing religion in the world, and its countries are playing a very important role in the world’s economy, the OPEP for example, dominates the world’s oil prices, but it is important to understand that Islamism is a religion that influences each and every single aspect of the believer, it is not like Catholicism were we profess we believe in God and sometimes in our daily life we don’t even remember his existence, God is present in every aspect of the life, the economic system in the middle east is fully affected by the religion, the religion is an active part of the system ,it has a complete relation with the believes, for them the economic activity is worship ,for them, work must be done with good intention and according to the laws, Islamism avoids corruption, stealing, cheating and job deficiency, Muslims are conscious that the boss is not always around but they have an excellence performance because they know god sees it all.


The banking sector in the Middle East is composed by commercial bank markets and the ease of access to bank credit. In some countries, the banking sector is well developed, profitable, and efficient, In other countries the banking sector is dominated by public sector banks (characterized by government intervention in liquidity issues, credit allocation and interest rates) the middle east banking system has been characterized by promoting growth and this is highly recognized, right now the region counts with is a large and competitive banking sector, and liquid and active equity and debt markets, that operate according to market Islamic principles, this high development on the banking system has increased the promotion of efficiency in allocating investments, and by doing so, has also increase the productivity by: Improving the management of risk, Identifying productive projects and efficient firms, and mobilizing savings among other things.


Islamic banking is consistent with the principles of the Islamic law and the development of eeconomics, according to the same law. Sharia,for example, forbids the acceptance or payment of interest fees for the lending and accepting of money respectively, (this is way different than the occidental world banking system, were a person can easily get ruined if the interest fees are not paid, usury is also forbidden, as well as investing in businesses that provide services or goods that are considered contrary to its principles .In the earlier times this principles were used as the basis to construct the economic system, but in the banking system they were not applied until late 20th century, were a number of Islamic banks were formed as private or semi-private entities, with the application of these principles. Nowadays the Middle East banking system is one of the world's fastest growing systems. The high education of the population and the strong believes on the Islamic principles are increasing the demand of financial products, which is generating diversity on the offers. Along with the growing banking system, the regulatory requirements for better monitoring of processes and to develop safe financial systems are increasing, for all of this reasons the middle east banking system has reached a good role in the world, by being characterized by its honesty and respect for customers, without no doubt banks and financial institutions in the middle east play a very important role in today’s international banking system. As we see the middle east banking system has become important not only because Islamic banks are a different developing and growing option to occidental banks, but because there are a lot of important Arab investors that have invested in the united states and Europe contributing to the development of those 2 banking systems.


There is one important thing I want to clarify, Islamic banking has the same purpose as conventional banking, but the only different thing is that it operates according to the rules of Shariah(Islamic rules on transactions). The basic principle is the sharing of profit and loss and the prohibition of riba(usury). In an Islamic mortgage transactions, for example, the bank's profit can’t be made explicit and there are no additional penalties for late payment, since the system is restricted to the Islamic religion , every transaction must be acceptable by the it ,so transactions related with alcohol, gambling, and pork are forbidden, the purpose of the system is only to engage on ethical investing, and moral purchasing, and this is promoted on the whole society, Muslims avoid consumism and high expending without no particular reasons, this is why saving is promoted so much and is an important precept in the daily life of every Muslim, they are prohibited to spend on forbidden things and on high amounts of a certain thing, and the banking system is mainly ruled by this important economic and religious principle: spending according to god’s legislation: because in Islamism the money and the goods can be a bless or a discord, they say that money shouldn’t be men’s main objective, men must have the money on the hand ,but not on the heart and they recognize that everything they have is not for their merits but because god want it that way, so as we see the application of all this beliefs gives us some of the reasons why the system is so successful right now.


THE "TOP 25 MIDDLE EAST BANKS"



Sayyid Tahir (2007) .islamic banking theory and practice: a survey and bibliography of the1995-2005 literature ,journal of economic cooperation,1-72.

Islam.(n.d) In Wikipedia. Retrieved April 28 ,2010, from http://es.wikipedia.org/wiki/Islam

Islamic banking .(n.d) In Wikipedia. Retrieved April 28 ,2010, from http://en.wikipedia.org/wiki/Islamic_banking