Interview with Prof. Nabil Baydoun, Chair of the Islamic Banking and Finance track
What do you see as the benefits of an Islamic system of finance?
Given the recent financial crisis, Islamic banking has been proposed as a serious alternative to the “conventional” banking approach. A great deal of the considerable sum of money available in the Gulf area is looking for an Islamic approach to financial transactions, and Islamic banking has been proposed as a way to attract these funds.
There are 360 Islamic banks around the world, some of which are supported by various governments. With Dubai being put forward as the capital of Islamic economy and where so many initiatives have taken place, HBMSU in partnership with the Dubai the Capital of the Islamic Economy have established the Dubai Center for Islamic Banking and Finance, and initiated a track in Islamic Banking and finance within Innovation Arabia 8 to mobilize quality policy oriented and basic research in the field of Islamic Banking and Finance and related areas, with a focus on issues related to growth, equity, and stability, creating competitive edge, and lessons to be learned from the current financial crisis.The Conference was established to align the research and educational components with His Highness’ initiative.
What do you think will be particularly discussed at the Conference in regard to Islamic banking?
The Conference addresses several important issues within Islamic banking and finance. Contributions come from both academic and applied research. Academics, researchers, and specialists from around the world are invited to submit papers in the following areas: Islamic financial instruments, Islamic banking practices, Islamic contracts, Islamic insurance, risk management, governance as well as Sharia issues and challenges facing Islamic banking and finance.
Why is the Conference relevant to a global audience?
The interest in Islamic finance not only comes from Muslims or from this part of the world; it also comes from the west and Muslims living in the west. They view Islamic finance as a profitable investment. Recent initiatives in places like London, Hong Kong are indicative of this.
What are some of the challenges facing Islamic finance?
Islamic banking, in the commercial sense, is a relatively young industry compared to “Western” or “conventional” banking. The Dubai Islamic bank was the first commercial Islamic bank, and it was founded in 1975. A young industry will obviously face challenges. The most significant of being that you have an industry that is religiously based and was established to facilitate Islamic financial instruments, and yet is bound by Western regulations. This needs to be addressed, as Islamic finance was established for a completely different purpose. The social value added to the community is a very important aspect generally not seen by Western observers.
Do you believe there should be an Islamic Central Bank to regulate Islamic finance?
There should be an organisation that takes religious and cultural specifics into account and looks at the banks as institutions that reflect the national and local characters of locations where they are situated. That is, banking regulations should embody some aspects of the characteristics of the banks’ locale.
What are you most excited to learn about at Innovation Arabia 8?
The Conference is one of the few scientific conferences taking place in Dubai, it will provide an opportunity for people to exchange ideas and reflect on the on His Highness’ initiative as it relates to Islamic Banking and Finance. We believe that a platform for scientific research which facilitates the initiation and publication of research from Dubai will be an important contributor to the overall success to the “Dubai the Capital of Islamic Economy” initiative.
For more information on Innovation Arabia 8: www.innovationarabia.ae