Would Islamic Banks Help Lessen the Decline of Palestinian Banking?

  • J. W. WrightJr.
Chapter
Part of the International Political Economy Series book series (IPES)

Abstract

Palestinians have lived in the Israeli-occupied territories as a severely disadvantaged majority,2 and the economic conditions in the West Bank and especially in the Gaza Strip have dramatically worsened since Arafat and Rabin’s famous handshake. Rather than opening a new stage in the Middle East peace process, the economic agreements that have been signed seem to be using Palestinian capital flows to promote Israeli and Jordanian business interests in the region rather than promoting employment development among the Palestinians themselves. In no area of the economy is this more true than in the banking sector which, after three decades of steady decline, has little capital left to offer the small- and medium-sized business owners who are most likely to create employment opportunities quickly and productively. At the same time it is becoming increasingly clear that mortgage banking in these areas is not a workable option for distributing capital; there is no real facility for valuing capital on a long-term basis. The intensified restrictions Israel has placed on the movement of Palestinian goods and people also makes it nearly impossible for Palestinian businesses to borrow or for their Israeli partners to accurately write cash flow projections. Under such a legally unbalanced trade regime, banks fear lending on a property-collateral basis; this regime has made many bank portfolios in the area unsafe.3

Keywords

Venture Capital Gaza Strip Islamic Bank Muslim Country United Nations Industrial Development Organization 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
This is a preview of subscription content, log in to check access.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

Notes

  1. 2.
    Noah Lewin-Epstein and Moshe Semyonov, The Arab Minority in Israel’s Economy: Patterns of Ethnic Inequality ( Boulder, Col.: Westview Press, 1993 ).Google Scholar
  2. 3.
    April Wright, “Are Middle East Banks Safe?”, International Journal of Commerce and Management 5 (3) (1995), pp. 90–105.CrossRefGoogle Scholar
  3. 4.
    Radwan A. Shaban, Ragui Assaad and Sulayman Al-Qudsi, “The Challenge of Unemployment in the Arab Region”, International Labor Review 134 (1) (1995), pp. 65–82;Google Scholar
  4. see also Sami Aboudi, “Palestinian Industrial Parks”, Peace Economics (2nd quarter 1995), pp. 8–14.Google Scholar
  5. 5.
    Sharon Stanton Russell and Muhammad Ali Al-Ramadhan, “Kuwait’s Migration Policy Since the Gulf Crisis”, International Journal of Middle East Studies 26 (4) (1994), pp. 569–87.CrossRefGoogle Scholar
  6. 6.
    Laurie A. Brand, “Economics and Shifting Alliances: Jordan’s Relations with Syria and Iraq, 1975–1981”, International Journal of Middle East Studies 26 (3) (August 1994), pp. 393–413.CrossRefGoogle Scholar
  7. 7.
    Ghadeer Taher, “Amman Economic Summit Launches Middle East Development Bank”, Peace Economics (4th quarter 1995), pp. 16–19.Google Scholar
  8. 10.
    Mohammed S. Amerah, Major Employment Issues in Some Arab Countries ( Amman: Economic Research Center for the Royal Scientific Society, 1990 ).Google Scholar
  9. 11.
    A.Y. Abu-Ayyash, Absorption of Returnees in Small Industrial Enterprises: The Case of the Development and Employment Fund (Amman: Economic and Social Commission for Western Asia, 1991).Google Scholar
  10. 12.
    Several recent reports address this issue in Jordan and to some extent in the occupied territories. Readers should see J.W. Wright, Jr, “Islamic Banking in Practice: Problems in Jordan and Saudi Arabia”, University of Durham Centre for Middle Eastern and Islamic Studies, Occasional Papers Series, no. 48, 1995;Google Scholar
  11. Christopher M. Vaughn, “Jordan’s Rentier-by-Proxy Economic Agenda: Recent Changes, Observations and Prospects for the Future”, Proceedings of the British Society for Middle East Studies Conference on Democracy in the Middle East, St Andrews University, 1992, pp. 644–56;Google Scholar
  12. Economic and Social Commission for Western Asia, “The Return of Jordanian/Palestinian Nationals From Kuwait; Economic and Social Implications for Jordan”, Amman, 1991; and ESCWA, 1992.Google Scholar
  13. 15.
    Norman Finkelstein, “Bayt Sahur in Year II of the Intifada: A Personal Account”, Journal of Palestine Studies 19(2) (Winter 1990), pp. 62–74.Google Scholar
  14. 16.
    Anne Grace, “The Tax Resistance at Bayt Sahur”, Journal of Palestine Studies 19(2) (Winter 1990), pp. 99–107.Google Scholar
  15. 19.
    Emma C. Murphy, “Israel and the Palestinians: The Economic Rewards of Peace”, University of Durham Centre for Middle Eastern and Islamic Studies, Occasional Paper Series, no. 47, 1995;Google Scholar
  16. Rodney Wilson, “The Palestinian Economy and International Trade”, University of Durham Centre for Middle Eastern and Islamic Studies, Occasional Paper Series, no. 45, 1994.Google Scholar
  17. 20.
    Jad Isaac, “A Socioeconomic Study of Administrative Detainees at Ansar 3”, Journal of Palestine Studies 18(4) (Summer 1989), pp. 102–9.Google Scholar
  18. 21.
    Christopher Clay, “The Origins of Modern Banking in the Levant: The Branch Network of the Imperial Ottoman Bank, 1890–1914”, International Journal of Middle East Studies 26 (4) (1994), pp. 589–614.CrossRefGoogle Scholar
  19. 25.
    A. Pervez Imtiaz, “Islamic Finance”,Arab Law Quarterly 5(4) (1990), pp. 259–81; and Wilson, 1994.Google Scholar
  20. 28.
    Zubair Iqbal and Abbas Mirakor, “Islamic Banking”, International Monetary Fund Occasional Paper no. 49, Washington DC, 1987.Google Scholar
  21. 29.
    A.S.M. Kahn, “Islam and Modern Banking”, Thoughts on Economics, 9(1) (1988), pp. 63–6; and Volker Nienhaus, “Islamic Banking: Microeconomic Instruments and Macroeconomic Implications”, Thoughts on Economics 9 (1) (1988), pp. 66–86.Google Scholar
  22. and Volker Nienhaus, “Islamic Banking: Microeconomic Instruments and Macroeconomic Implications”, Thoughts on Economics 9 (1) (1988), pp. 66–86.Google Scholar
  23. 30.
    Moustafa Abdel-Magid, “The Theory of Islamic Banking: Accounting Implications”, International Journal of Accounting 17(1) (1982–83); pp. 79–102.Google Scholar
  24. 31.
    Muhammad A. Khan, “Islamic Banking in Pakistan”, International Journal of Islamic and Arabic Studies 2 (2) (1985), pp. 21–34;Google Scholar
  25. David Cobham, “Finance for Development and Islamic Banking”, British Society for Middle Eastern Studies Conference, St. Andrews, Scotland, 1992, pp. 619–37.Google Scholar
  26. 32.
    Nabil Saleh, Unlawful Gain and Legitimate Profit in Islamic Law: Riba, Gharar and Islamic Banking ( Cambridge, UK: Cambridge University Press, 1986 ), pp. 49–50.Google Scholar
  27. 33.
    A.H.M. Sadaq, “Islamic Perspectives on Monetary and Fiscal Policies and their Implications for Development”, International Journal of Islamic and Arabic Studies 5 (1) (1988), pp. 1–16.Google Scholar
  28. Also see M. Umar Chapra, Toward a Just Monetary System ( Leicester, UK: The Islamic Foundation, 1985 );Google Scholar
  29. Ma’en Mardi Al-Qatamin, “Islamic and Conventional Banks: A Comparative Study”, MBA. thesis, University of Nottingham, 1990;Google Scholar
  30. S.R. Khan, “Profit and Loss Sharing: An Economic Analysis of an Islamic Financial System”, Ph.D. dissertation, University of Michigan, 1983.Google Scholar
  31. 34.
    Cengiz Erol and Radi El-Bdour, “Conventional and Islamic Banks: Patronage Behavior of Jordanian Customers”, International Journal of Bank Marketing, 1990.Google Scholar
  32. 35.
    Bernhard Fischer, “Savings Mobilization in Developing Countries: Bottlenecks and Reform Proposals”, Savings and Development 13 (2) (1989), pp. 117–31.Google Scholar
  33. 36.
    World Bank, World Development Report (New York: Oxford University Press, 1989), as reviewed by Rodney St Hill, in “Stages of Banking and Economic Development”, Savings and Development 16(1).Google Scholar
  34. 37.
    J.W. Wright, “Islamic Banking in Practice: Problems in Jordan and Saudi Arabia”, University of Durham Centre for Middle Eastern and Islamic Studies, Occasional Papers Series, no. 48, 1995;Google Scholar
  35. J.W. Wright, Bandar Al-Hajjar and John Presley, “Structural and Attitudinal Impediments to Effective Capital Distribution in Saudi Arabia’s Islamicizing Economy: Implications for Financial Sector Training”, in Ehsan Ahmed, Economic Growth and Human Development in Islamic Perspective (Herndon, Va: International Institute for Islamic Thought, 1992), pp. 87–95.Google Scholar
  36. 38.
    Vandana Chandra and A. Ali-Khan, “Foreign Investment in the Presence of an Informal Sector”, Econometrica 60 (1993), pp. 79–103.Google Scholar
  37. 41.
    A.M. El Gousi, “Riba, Islamic Law, and Interest”, PhD dissertation, Temple University, 1982, pp. 215–216.Google Scholar
  38. 50.
    Mary E. Schmidt, “Chapter on Social Funds”, World Bank Participation Handbook ( Washington DC: World Bank, 1994 ).Google Scholar
  39. 52.
    Kate Gillespie, Liesle Riddle, Edward Sayre and David Sturges, “Financing Palestine: The Attitude of Palestinian-American Toward Homeland Investment”, in Faith M. Hanna (ed.), Middle East Banking and Finance: A Collection of Essays ( New York: The Arab Bankers Association of North America, 1996 ), pp. 67–87.Google Scholar

Copyright information

© J. W. Wright, Jr. 2000

Authors and Affiliations

  • J. W. WrightJr.

There are no affiliations available

Personalised recommendations