Islamic home finance in the United Kingdom

Abstract

Following the recent financial crisis that has affected some major economies around the world, and its attendant consequences, there have been calls for ways of practicing finance more responsibly especially here in the UK. One such candidate that has been identified and promoted as a viable alternative to the way finance is being practiced is Islamic finance. Although tiny in its present size compared to conventional finance, its rate of growth, moral underpinnings and relative stability has been pointed out as a reason why it should be taken seriously. Even before the financial crisis, the UK government had identified the Muslim community in the UK as being financially excluded in terms of financial choices and had taken steps to correct this perceived anomaly. The UK government’s stated objective in Islamic finance were twofold, first financial inclusion for UK Muslims that were not participating in the financial markets due to reasons of faith, and the promotion of continued dominance of the UK especially London, as a global financial city by making it a global hub for Islamic finance. This thesis investigates the UK government’s discourse on Islamic finance around the use of Islamic home purchase plans, the first Islamic finance product licensed in the UK. It traces the motives of the protagonists in establishing this market, and the various steps that have been taken to actualise it. In doing so, the thesis contrasts this with the views of those that have embraced this new market by collecting empirical data at various levels and in the process reveals those that have not embraced this new subjectivity especially those that have subverted the growth of the market. This thesis argues that the introduction of Islamic finance and the financial subjectification of Muslims can be traced to a drive for financialisation which is anchored in the belief of ideologically-driven discourses that privilege financial markets as the medium for individuals and households‘ socioeconomic reproduction, which removes the responsibility of government for the economic and social development of its citizens, and at the same time enables more integration of different kinds of groups into the broader circuits of capital and financial accumulation. For the majority of the UK Muslims, this process has not meant more financial inclusion. As exemplified in the thesis, embracing this new subjectivity is beyond the reach of most UK Muslims and has only highlighted, and in some cases exacerbated these differences.