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Essay / Research Paper Abstract
This 3 page paper is a broad overview of Kuwait Finance House. Starting with a general description of Islamic banking the paper outlines why Kuwait Finance House has been so successful, how they have differentiated themselves and their major areas of operation The bibliography cites 4 sources.
Page Count:
3 pages (~225 words per page)
File: TS14_TEkuwtfh.rtf
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by religious needs. Islam prevents dealing being undertaken by Muslims where there is interest or usury, also known as Riba (Gafoor, 1995). Under section 278-279 of the Koran is
states "Ye who believe! Fear Allah and give up what remains of your demand for usury, if ye are indeed believers" (quoted Lofthouse, 2003). Therefore, Islamic banks are often referred
to as interest free banks (Gafoor, 1995). However, Muslim need banks as much as anyone else, therefore alternate banking methods have evolved where there is not the use
of interest rates (Gafoor, 1995). The prohibition of interest does not mean a banks or an individual cannot make a profit, this is allowed within the religion
where the profit is legitimate. This may mean that deposit or investment accounts rely on a profit and loss sharing initiatives, and for loans interest rates may not be payable,
but a fee that is only due when the loan has been repaid (Gafoor, 1995). The returns for investors may be lower as on the savings accounts the capital may
not be guaranteed, however investments tend to be cautious and as such there may be capital guarantees depending on the bank (Gafoor, 1995). The Kuwait Finance House was started in
response to a need for financial services that met the Islamic requirements for interest free banking. The bank began in 1975 and was an attempt to develop a banking service
that was independent from western banks (Lofthouse, 2003). The growth of this sector is high due to the demand. Services are provided
for a range of customers, from commercial customers such as the need to borrow or to provide facilities for customer to borrow and purchase good, such as car, to individual
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