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Islamic Finance in Europe

Islamic Finance in Europe

Towards a Plural Financial System

Studies in Islamic Finance, Accounting and Governance series

Edited by Valentino Cattelan

Highlighting the impact of current globalization on financial markets, this topical book challenges the universality of Western property rights and interprets Islamic finance in Europe as part of a plural financial system, where different conceptions of economic justice(s) co-exist and influence each other.

Chapter 14: A critical view on Islamic finance in Germany

Azadeh Farhoush and Michael Mahlknecht

Subjects: economics and finance, financial economics and regulation, islamic economics and finance


Despite a potential market for Islamic financial products in Germany, as recently documented by Farhoush and Schmidt (2011), little progress has been made until now in the national Shari‘ah compliant marketplace. This lack in improvement seems to contrast with the favour towards Islamic finance expressed by the German Federal Financial Supervisory Authority (BaFin), whose ‘officials, including its president Mr Jochen Sanio, repeatedly signalled their willingness to support Islamic banking’ (Schönenbach, 2011). At the same time, in order to understand the lack of progress in the German Islamic finance market, we have to consider the overall institutional attitudes towards Islamic finance along with the attitudes within the Muslim population. Are German institutions overly inflexible towards new products or paradigms? Are such products allowed or profitable under existing German laws and regulations? How do legal constraints effect the introduction of new products?

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