The development of the Islamic financial sector in Bahrain, Qatar and Essay

The development of the Islamic financial sector in Bahrain, Qatar and Dubai - Essay Example They were staunch in their outlook and believed that such profit making activities would violate the principles of the Islam religion. However, in 1975 the Emir of Dubai passed a decree for the establishment of the Dubai Islamic Bank and this heralded a new era of modern Islamic financial activities. Following this example, other GCC nations also established their respective central banking authorities. These Central banks and the other financial authorities always ensured that the countries’ financial activities were conducted in compliance with the regional Islamic principles. Therefore, these business operations are known as the modern Islamic financial and banking functions. In 1982, the state of Qatar established the country’s first Islamic bank. Qatar’s financial economy is dominated by the presence of commercial banks such as the Qatar National Bank, the Commercial Bank of Qatar, the Doha Bank, Qatar Islamic Bank, Masraf Al Rayan, the Qatar International Islamic Bank and so on. These banks have primarily concentrated on expanding their business activities in the domestic economy and have also formed Islamic affiliate institutions for this purpose. For example, the Qatar National Bank has established the Al Islami subsidiary, the Commercial Bank of Qatar has formed its Al Safa Islamic Banking affiliate, the Doha Bank has created the Doha Bank Islamic and so on. Gradually, the small economy of Qatar was flooded by intense competition from a plethora of different financial institutions. This is turn encouraged the country’s existing commercial banks to diversify their business and expand their operations in the international market. Many of the banks established affiliate organizations in foreign countries to enhance their business prospects in those places. The Qatar Islamic Bank formed the European Finance House in London, in