Role of Islamic Finance in Tackling Financial Exclusion in the United Kingdom

“Dr. Warsame identifies that skepticism about the authenticity of the available Shari’a- compliant financial products, the perceived materialistic approach and a huge expectation gap between what less affluent UK Muslims expect from the providers of Islamic financial products in the UK and what is actually on offer, are the main reasons why less affluent UK Muslims are holding back from accessing them.”
Dr. Atif Abdallah,
University of Sharjah

“The research undertaken by Mohammed Warsame reveals that the causes of financial exclusion are not only economic, but may reflect social, cultural and, most importantly, religious factors, especially in marginalized Muslim communities...the empirical research has lessons for policies aimed at achieving greater financial inclusion on the part of other Muslim community groups.”
Rodney Wilson, Emeritus Professor,
Durham University, UK

“The research revealed that the level of awareness about existing Shari’a-compliant financial products was relatively low among Muslim populations in the UK. 50% of respondents said they had not heard of the Shari’a-compliant financial products…the research revealed that financial illiteracy is one of the main causes of the low demand for Islamic financial products.”
Dr. Nizar Al Sharari,
University of Sharjah

“This fascinating, timely and welcome insight is both scholarly and accessible. Its analysis of UK Islamic finance and UK economics has surmised that there is a lock of financial inclusivity amongst the less affluent UK Muslims due to the grave concerns they have expressed regarding the acceptability, accessibility and affordability of existing Shari’a- compliant financial products…Warsame advances scholarship in addressing how religious factors have been largely ignored in the past…It has implications for public policy throughout Europe, North America and Australia…”
Dr. Glen Reynolds,
University of Sunderland, UK

Abstract
Foreword by Rodney Wilson
Acknowledgement
List of Abbreviations
CHAPTER 1: INTRODUCTION
1.1 Research Background
1.2 Significance of the Study
1.3 Research Problem
1.4 Research Objectives
1.5 Specific Research Questions
1.6 Research Hypotheses
1.7 Research Design and Methodology
1.8 Outline of the Research Chapters
CHAPTER 2: INTRODUCTION TO FINANCIAL EXCLUSION
2.1 What is Financial Exclusion
2.2 Causes of Financial Exclusion and Those Most Likely to be Affected by it
2.2.1 Societal Factors
2.2.2 Supply Factors
2.2.3 Demand Factors
2.3 Who is Financially Excluded
2.4 Wider Implications of Financial Exclusion
2.4.1 Financial Consequences of Financial Exclusion
2.4.2 Social Consequences of Financial Exclusion
2.5 Public Debate on Financial Exclusion
2.6 Policy Responses to Financial Exclusion
2.6.1 Voluntary Charters and Codes of Practice
2.6.2 Legislation
2.7 Combined Voluntary and Policy Measures for Overcoming Financial Exclusion
2.7.1 Measures for Tackling Supply Factors
2.7.2 Measures for Tackling Demand Factors
2.7.3 Measures for Tackling Societal Factors
2.8 Financial Exclusion in the Developing World
2.8.1 Establishing the Appropriate Financial Infrastructure
2.8.2 Enhancing the Informal Financing Schemes and Micro-Financing Initiatives
2.8.3 Micro-Financing as a Tool for Combating Financial and Social Exclusion in the Developing World
2.9 Summary
CHAPTER 3: EXSXTENT OF FINANCIAL EXCLUSION IN THE UK AND ITS IMPACT ON THE LESS AFFLUENT UK MUSLIM COMMUNITIES
3.1 Introduction
3.2 Financial Exclusion in the UK
3.3 Who is Financially Excluded in the UK
3.4 Less Affluent UK Muslims as one of most Vulnerable Groups Affected by Financial Exclusion
3.5 Public Interest ion Financial Exclusions as a Sub-set of the Wider Problem of Social Exclusion in the UK
3.6 Policy Response to Financial Exclusion in the UK
3.7 Summary
CHAPTER 4: ROLE OF ISLAMIC FINANCE IN TACKLING FINANCIAL EXCLUSION AND THE UK EXPERIENCE
4.1 Introduction
4.2 The Concept of Social Justice in Islam
4.2.1 Treatment of Poverty in Islam to promote Social Inclusion
4.3 Socio-economic Objectives of Islamic Economics
4.4 Role of Islamic Finance in Tackling Financial Exclusion
4.4.1 Need for Dramatic Change of Course to Bridge the Gap
4.4.2 Similarities and Differences Between Islamic Finance and Conventional Micro-Financing
4.4.3 Islamic Micro-Financing as a Tool for Tackling Financial Exclusion
4.5 UK Experience of Islamic Finance in Tackling Financial Exclusion
4.5.1 Developing Stages of Islamic banking in the UK
4.5.2 Al-Baraka (1982-1993)
4.5.3 United Bank of Kuwait – Islamic Investment Banking Unit (IIBU) (1997-1999)
4.5.4 Amanah Islamic Finance Through HSBC (2003 to date)
4.5.5 Lloyds TSB Islamic Financial Services Through Lloyds TSB (2005 to date)
4.5.6 Al-Buraq Home Finance (2005-date)
4.5.7 Evaluation of the UK Islamic Windows
4.6 The Islamic Bank of Britain
4.6.1 Products Provided by the Islamic Bank of Britain
4.6.2 Personal Banking Facilities
4.6.3 Business Banking Facilities Offered by the Islamic Bank of Britain
4.6.4 Evaluation of the Shari’a-Compliant Banking Facilities Available for Tackling Financial Exclusion in the UK
4.6.5 Home Financing Offered by the Islamic Bank of Britain
4.6.6 Evaluation of the Islamic Modes of Home-Finance Applied in the UK to Reduce Financial Exclusion Among poor UK Muslims
CHAPTER 5: FINANCIAL INCLUSION INITIATIVES IN THE UK AND THEIR RELEVANCE TO THE LESS AFFLUENT UK MUSLIM COMMUNITIES
5.1 Introduction
5.2 Financial Inclusion Initiatives in the UK
5.3 Micro-Credit and Financing Institutions in the UK
5.3.1 Community Development Credit Unions in the UK
5.3.2 Services by Credit Unions
5.4 Community Development Financing Institutions in UK
5.5 Services Provided by CDFIS
5.5.1 Street (UK): Learning from Community Finance
5.6 Provisions of Shari’a -Compliant Micro-Finances in the UK
5.6.1 Ansar Finance Group
5.6.2 Business Finance Northwest
5.7 Summary
CHAPTER 6: RESEARCH DESIGN & METHODOLOGY
6.1 Introduction
6.2 Theory of Research Design and Methodology
6.2.1 Types of Research Design
6.3 Research Methodology
6.3.1 Survey Questionnaires
6.3.2 Semi-Structured Interviews
6.4 The Relevance of the Selected methodologies to my Research Questions and Hypotheses
6.4.1 Research Hypothesis and Characteristics
6.4.2 Objectives of the Survey Questionnaire
6.4.3 Objectives of the Semi-Structured Interviews
6.5 Validity and Reliability of the Data
6.6 Stages of Conducting the Fieldwork
6.6.1 Development of the Survey Questionnaire and the Semi-Structured Interviews
6.6.2 Piloting the Survey Questionnaire and the Semi-Structured Interviews
6.6.3 Collecting the Data
6.6.4 Sampling
6.6.5 Practical Steps for Conducting the Survey Questionnaire
6.6.6 Questionnaire Screening and Analysis
6.6.7 Conducting the Semi-Structured Interviews
6.6.8 Challenges and Obstacles
6.7 Summary
CHAPTER 7: QUESTIONNAIRE SUMMARY AND RESPONDENT PROFILING
7.1 Introduction
7.2 Explanation of the Survey Questionnaire
7.3 Characteristics of the Sample Respondents
7.4 Summary
CHAPTER 8: ANALYSIS OF THE RESULTS OF THE SURVEY OF QUESTIONNAIRE
8.1 Introduction
8.2 Carrying out the Analysis
8.3 Respondents’ access to Conventional Finance
8.4 Access to Conventional Finance Classified by Respondents’ Characteristics
8.6 Access to Informal Finance
8.7 Differences Between the Respondents in Accessing Informal Financial Services
8.10 Respondent’s Knowledge and Access to SCFP* Classified by Respondents’ Characteristics
8.12 Factor Analysis
8.12.4 Interpreting the Factor Analysis
8.13 Mann-Whitney and Kruskall-Wallis Analysis
8.13.2 Interpreting the Presented Information
8.14 Summary
CHAPTER 9: INTERVIEW ANALYSIS
9.1 Introduction
9.2 Analysis of the Shari’a-Compliant Financial Products in the UK and the Length of their Presence
9.2.2 Analysis of the Respondents’ Answers Regarding their Shari’a -Compliant
Personal Banking Facilities
9.2.3 Evaluation of the Role that Shari’a-Compliant Personal Banking Facilities Play In Tackling Financial Exclusion Among UK Muslims
9.2.4 Analysis of Interviewees’ Responses Regarding the Shari’a-Compliant Business Banking Facilities on Offer in the UK
9.2.5 Evaluation of the Role that Shari’a-compliant Business Banking Facilities Play in Enhancing the Financial Inclusion of UK Muslims
9.2.6 Analysis of the Interviewees’ Responses Regarding Shari’a-Compliant Home Financing Facilities in the UK
9.2.7 Evaluation of the Extent to Which Shari’a-Compliant Home Financing Facilities in the UK are Enhancing the Home ownership of UK Muslims
9.3 Studies Carried Out by the Institutions Providing Shari’a-Compliant Finance in the UK Prior to the Introduction of Such Products
9.4 The Customers Accessing The Shari’a-Compliant Financial Products Currently Available in the UK
9.5 The Role Shari’a-Compliant Financial Institutions Should Play in Tackling Financial Exclusion
9.6 Prospects and Challenges for Islamic Finance in the UK
9.6.3 The Unwavering Support of the British Government
9.6.4 Legislative and Regulatory Measures Introduced by UK Government in Support of Shari’a-Compliant Finance
9.6.5 Well-Established Long-Term Relations Between The UK and The Muslim World And London’s Position as a World-Class Financial Centre
9.7 Challenges for Islamic Finance in the UK
9.8 Summary
CHAPTER 10: CONCLUSION AND RECOMMENDATIONS
10.1 Introduction
10.2 Summary of the Research
10.3 Discussion of the Research Findings
10.4 Recommendations and Policy Implications
10.5 Recommendations for the providers of Shari’a-Compliant Finance in the UK Banking Facilities on Offer in the UK
10.5.1 Need for Comprehensive and Aggressive Educational Campaign Delivered Through the Right Channels
10.5.2 Using the Leverage of Local Imams by Educating Them on Islamic Finance to Educate Their Local Community
10.5.3 Refining the Current Marketing and Publicity Strategies
10.5.4 Development of products suitable for the local UK Market
10.6 Recommendation for all UK Government Department Involved in Tackling Financial and Social Exclusion
10.6.1 Recognition of the Uniqueness of the Financial Exclusion Problem of Less Affluent UK Muslim Communities
10.6.2 Tailor-Made Financial Advice and Guidance
10.6.3 Enhancing the Existing Informal Financial Services
10.6.4 Establishing Specialist Units within mainstream Government Departments to Combat Financial and Social Exclusion
10.7 Recommendations for Community Development Institutions
10.8 Recommendations for less Affluent UK Muslim Communities
10.9 Research Limitation and Further Research
10.9.1 Further Research Topics
APPENDIX
BIBLIOGRAPHY
INDEX