Islamic finance in Britain

Abstract

This paper examines the recent changes in Islamic banking in the UK, particularly in respect to housing finance. It argues that they are an outcome of a complex interaction between potential lenders, the local Muslim community and the British government. It also questions the initial assumptions of the potential size of the Islamic housing finance market, its degree of price competition, and whether London's development as an Islamic financial centre might divert the conventional UK banks' attention from middle class British Muslims to the richer foreign Muslim investors. It concludes that an independent cooperative structure, perhaps in conjunction with others with similar views, may provide more sustainable longer term future for Islamic finance in Britain than the current industry.