Assessment of the prospects and challenges of Islamic Banking and Finance in the UK
1. A growing number of non-US and US companies are seeking access to US capital
markets because they provide a large source of financial resources. The most
common way for a company to go public is through an Initial Public Offering (IPO).
By this method, a company reaches at least two goals: a ticker and financial
resources. Between 1990 and 1999 a total number of 4,129 companies have entered
the US capital markets via IPO, and during the 1980s 2,348 companies entered the
same markets. However, IPO is not the only way to enter the market. For more than
twenty years some companies have sought access to US capital markets through a
reverse merger (RM). A reverse merger (RM) is a technique in which a private
company is acquired by a shell or defunct public company via stock swap. As a result,
the private company becomes public.
Discuss and analyse the rationale of reverse mergers. Using both quantitative and
qualitative approaches, compare and contrast reverse mergers with ordinary IPOs,
gauging the popularity, efficacy, challenges and future prospects of each method in
the global financial arena.
2. The world economy has undergone a major transformation in the last several years.
Financial crisis of 2007-2008 prompted a new wave of industry regulation, in
particular with respect to financial sector. Most countries in the world suffered a
period of recession which influenced thinking about the balance between the role of
state, private sector and their interaction in economy. This process also affected UK
and its economy.
How has HMRC adapted and responded to challenges arising as a result of changes
in the economic and regulatory environment in the last five years?
3. Small businesses are vital to the success of the economy. Not only as they provide
the success stories of the future, but also because they meet local needs (e.g.
hairdresser, financial consultant, plumber). They serve the requirements of larger
businesses e.g. for photography services, printed stationery, catering and routine
maintenance. Most UK businesses today are small. Two thirds are owned and run by
one person. Nearly 90% employ less than 6 people. They are also an important
source of employment. These companies need finance to grow.
What options of financing for small companies are available for them and which are
actually being used?
4. Islamic Finance became an important part of the finance worldwide. Islamic finance
has, for example, successfully created products equivalent to those used in
conventional finance, such as sukuk (Islamic bonds). Islamic Financial Services Board
estimated in 2007 that by the end of 2005, more than 300 institutions in over 65
jurisdictions were managing assets worth around US$700 billion to US$1 trillion in a
Sharia-compatible manner. The figure of close to USD 1 trillion seems to be supported
by the International Financial Services London (IFSL)′s January 2010 report. The
report, which revealed a value of US$951 billion for 2008, added up the assets of
Islamic commercial banks (74%), investment banks (10%), Sukuk (Islamic bonds)
issuances (10%), funds (5%) and Takaful (Islamic insurance) institutions (1%). Many
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academics dispute the USD 1 trillion figure, putting the actual size of the Islamic
finance industry between US$400-500 billion, with 300 institutions operating in more
than 40 countries.
assess the prospects and challenges of Islamic Banking and Finance in the
5. A Bank is a financial institution which is involved in borrowing and lending money.
Banks take customer deposits in return for paying customers an annual interest
payment. The bank then uses the majority of these deposits to lend to other
customers for a variety of loans. The difference between the two interest rates is
effectively the profit margin for banks. Banks play an important role in the economy
for offering a service for people wishing to save. Banks also play an important role in
offering finance to businesses who wish to invest and expand. These loans and
business investment are important for enabling economic growth. The financial
services industry of the United Kingdom contributed a gross value of £86,145 million
to the UK economy in 2004. The industry employed around 1.2 million people in the
third quarter of 2012 (around 4% of the British workforce). The estimated amount
of total taxes paid by the Financial Services Sector in the year to 31 March 2012 is
£63bn, 11.6% of the total UK government tax receipts. After 2007 the British banking
sector has undergone a major restructuring. Some well-known banks have been
taken over by larger institutions, some disappeared and a few new, “challenger”
describe and analyse the restructuring process in the banking sector of UK
from the British economy’s point of view. Will this process facilitate the access to
finance by companies located in the UK, thus promoting economic growth?