Entrepreneurship and business innovation in the Middle East

Abstract

Instruments of Islamic finance have recently reemerged as an innovative tool for entrepreneurial transactions. Purpose of this chapter is to: a) define Islamic banking Product; b) compare with nearest western banking equivalent; c) highlight advantages and disadvantages of product; d) state future progression of banking towards convergence or divergence between Islamic and Western banking; and e) finally evaluate the role of client focus and customer driven performance in the future trends of entrepreneurial Islamic funding. This chapter highlights the concept of Islamic Banking. Business is slowly adopting Islamic banking as a rival market to western fractional reserve banking from the perspective of delivering customer value. This synopsis covers 19 instruments of Islamic banking by comparing the advantages and disadvantages of each one to that of conventional banking. Interestingly, the comparative methods result in several findings including the fact that banks must be completely devoted to providing customers with excellent service standards, and must also cater for customers‘ needs and demands. In addition, if Islamic services are desired, then the ones who cater for those needs will survive. Whereas western banks have a higher chance to penetrate the Islamic banking sector, Islamic banks can’t provide any conventional banking services due to Sharia’a rules that prohibit fixed or floating payment or acceptance of specific interest or fees for any service. This chapter also concludes with a contrast between Islamic and western banking from a customer perspective.