While many eyes remained locked on emerging markets like China and India, another industry in the east is developing at a remarkable pace – Islamic finance.
This niche alternative to mainstream finance adheres to the principles of sharia law, which forbids interest or fees for loaning money or investment in businesses that go against Islamic principles.
Over the past 30 years, Islamic financial institutions have grown in more than 75 countries worldwide. Although mostly concentrated in the Middle East and southeast Asia, many are also spreading to Europe.
This ripple is also making its way into the banking and finance streams of UK and European business schools. London-based Cass Business School and Bangor Business Schools in Wales now offer concentrated MBA programs in Islamic Finance. Meanwhile a handful of other UK schools – namely Durham, Aston, Henley, Salford, and Newcastle – are offering other kinds of similarly specialized master's programs.
Why are British schools taking such an interest? Ehsan Razavizadeh, who heads Cass' Dubai Islamic Finance Executive MBA program, attributes it partly to the UK's large Muslim population, and partly to global trends.
“After September 11th, most of the Muslim capital floated to London and the UK, in general,” says Razavizadeh.
“Especially London, it’s a very cosmopolitan city, and it tolerates a lot of cultures,” he adds. “I think it’s very natural for the UK to take some steps towards getting involved in Islamic finance.”
France's Reims Management School, the University of Malaya, University College Bahrain, and Australia's La Trobe University are among the other schools worldwide that offer specialized MBAs or Masters programs.
In most programs focused on Islamic finance, an emphasis is placed on how this sector differs from conventional finance and banking. Some of these differences account for the spike in interest from European banks and business schools.
Certainly, one of the attractive factors about the sector is its rapid growth. According a Financial Times report from earlier this year, global sharia-managed assets are estimated at around 900 billion dollars – twice as much as five years ago.
The sector also represents a gateway into attractive growing markets in the Persian Gulf, south and southeast Asia, and Africa, where – in contrast to most of Europe – the population is expected to rise over the next few decades.
Yet another attractive aspect of the sector has been its resilience. While it has not been impervious to global economic trends, Islamic finance has survived (and grown) despite the worldwide financial crisis that began in 2008.
“That was a time when people started to think about Islamic finance as an asset-based financing system, because without having an asset you can’t lend money, so it’s quite different than commercial finance,” says Razavizadeh.
“From that perspective it was very attractive to many financial institutions in the UK, including HSBC, for example.”
The Islamic Finance Executive MBA specialization at Cass is organized in three modules: Islamic banking and finance (with a focus on its history and major players), Islamic economics, and the Islamic law of business transactions.
If you’re looking for a job within the burgeoning Islamic finance sector, or if you’re managing Islamic funds or Islamic insurance (called takaful), it is necessary to understand just how closely tied Islamic history and rules are to the local financial policy.
“Primarily, we focus on the implications of the injunctions in Islam,” says Owain ap Gwilym, who directs banking and finance studies at Bangor Business School. “We rationalize these injunctions in the light of modern finance, and illustrate directions of financial development.”
ap Gwilym says it is important to look at the wide cultural range of students that enroll in Islamic finance programs, proving that this stream does not require a familiarity with or accordance to Islamic principles. Rather, learning about Islamic finance simply means opening new career paths.
The concentration could be particularly attractive to applicants planning to enter the financial services industry, which as the moment is offering an increasing range of Islamic products and services to its customers.
It can also be alluring to those who already have work experience under their belt, but who are seeking to re-direct their careers in light of the interest in, and demand for, Islamic financial services.
But according to Ehsan Razavizadeh a specialized MBA in Islamic Finance - like any MBA specialization - shouldn't necessarily lock you onto one career path.
He points out that the Cass specialist stream in Islamic finance provides an overview of the field, but it is a standard MBA program above anything else.
“We don’t want to limit them in the future if they want to change their industry,” says Razavizadeh.
And by the rate at which the financial world is turning, it’s probably the best idea to have all corners covered.
For more information about the schools mentioned above and others offering MBA programs in Islamic finance, please follow the links below.
Photo: M. Filtz