It is no secret that conventional financial systems are not working and the sector is looking for alternative and responsible ways of doing business.
Islamic finance poses an ethical and non-conventional model and is currently the only area with strong growth, said Professor Ignacio dela Torre, Academic Director of the Master in Finance Programmes at Spain’s Instituto de Empressa (IE) Business School last week.
Dela Torre was speaking at the relaunch of the Saudi-Spanish Centre for Islamic Economics and Finance, a partnership between IE Business School and Saudi Arabia’s King Abdul Aziz University.
The relaunch coincided with a conference on “Islamic Finance in the 21st century”. He said when employment levels are high in the West, it makes sense for finance students to familiarise themselves with alternative finance models that also include eco-finance and micro-finance. “From a macroeconomic point of view it makes sense that European governments and financial markets set up Islamic windows so excess liquidity can be channelled through some European financing markets with these structures.”
“There is already $1 trillion (Dh3.67 trillion) of Islamic money and it is growing at 20 percent with $200 million of additional Islamic money coming in every year,” said Dela Torre.
Students are showing interest in this area of finance and universities in the United Kingdom and France have responded to the demand early on. Over the past five years, IE has been offering Islamic finance programmes.
“When you travel to the Gulf, where 50 percent of banking is Islamised, there are not enough people with skills and understanding of Islamic finance,” he said. He added that from a career perspective it is wise to have knowledge of this area because those who work in conventional finance will sooner or later be faced with Islamic finance.
Dela Torre says the field is not difficult to understand once the basics are covered in the curriculum illustrated by the fact most expatriate professionals in the GCC’s Islamic banking sector are Americans and Indians.
Dr. Ahmad Mohammad Ali Al Madani, Head of Islamic Development Bank, said since the financial crisis, people have become more concerned with where their money ends up once invested and not just profit margins.
Celia de Anca, professor of Islamic Finance at IE Business School, added that students are increasingly interested in financial sustainability and ethics.