ISLAMIC BANKING

Saudi People Attitudes Towards Islamic Banking

Saudi People Attitudes Towards Islamic Banking

Objectives

The present research, as mentioned in the introduction, is a study of Islamic banking in Saudi Arabia.More particularly, the study seeks to establish the level of awareness that Saudies have in relation to the culture of Islamic banking, the attitude of Saudi People towards Islamic banking and a ranking of the bank selection criteria of Saudies - and for each part of the study.(Aggarwal,2000,93)In the context of what is said immediately above, the following three hypotheses were formulated:

What are the peoples attitude to the Islamic banking?

Do they believe it is totally Halal or it just a necessary economic issue?

Is the IF going to survive and succeed in front of the all current banking ways?

Overview

The Kingdom of Saudi Arabia is an Arabic Islamic monarchy, headed by the King, who also serves as the country's Prime Minister. The King exercises his authority through a body referred to as the Council of Ministers. Two other councils advise the King and Council of Ministers. The first council is the Consultative Council (Majlis Alshoura), which includes academics, businesspeople, government members, and religious scholars. The second council is the Council of the Assembly of Senior Religious Scholars (Majlis Kibar al-Ulama), a body that is charged with the responsibility of ensuring that Saudi Arabia is governed in conformity with Islamic law and teaching.(Bltagi,2006,12)

Islamic teaching plays the major role in the formulation and development of the legal system in Saudi Arabia. The Qur'an, the holy book of Islam, is the most important source of legislation, followed by the Sunna, the teachings of the Prophet Mohammed. As a matter of Islamic law, if an authoritative legal statement from the Qur'an or the Sunna (collectively referred to as Shari'a) can be cited, it is binding and supersedes all other sources of legislation. Other sources of law in Saudi Arabia include Royal and Ministerial Decrees and Departmental Circulars.(Aggarwal,2000,93)

The Saudi economic and financial system

The Saudi economy, the largest in the Middle East, has been developed through a series of 5-year plans. These plans have been formulated to pursue economic diversification through the development of private sector activities as well as greater economic development from the private sector. (Bltagi,2006,12) The government's commitment to foster greater private sector involvement in its economic development activities suggests that the private sector will play a leading role in financing these development activities, creating a greater demand for relevant and reliable financial information to facilitate effective decision making. It also suggests that financial markets in Saudi Arabia will be more active and move toward sophisticated trading arrangements. (Haron,1998,23)

Saudi Arabia does not have a physical stock market location; the exchange of stocks is conducted through a computerized network. (Aggarwal,2000,93) The Saudi stock market is the eighth largest stock market by market capitalisation in the developing world, and it is the largest stock market in the Arab world, accounting for 63% of the volume of shares on all Arabian stock ...