Islamic finance in Europe (98)

Continuation

Islamic banking began in the United Kingdom in the 1990s.

At that time, corporations from the Gulf Cooperation Council introduced Islamic mortgages.

It based on the murabahah principle.

This offered mortgage financing shortly thereafter.

The financing based on the ijarah principle.

However, these instruments were perceived to be very expensive due to the double stamp duty applicable:

-      first, when a bank purchases a house;

-      second, when a buyer/client purchases this house from the bank concerned.

The abolition of the double taxation regime in 2004 paved the way for increased demand for Islamic home financing.

The Bank of England and the Financial Services Authority (FSA), the two banking regulators, have been open to the development of Islamic finance in the UK.

From the research paper of European Central Bank

(Authors: F.Mauro, P.Caristi, S.Couderc, A.D.Maria, L.Ho, B.K.Grewal, S.Masciantonio, S. Ongena and S.Zaher)