Islam is a minority religion in Australia. However, even though most Australians are non-Muslims, several financial institutions in the country are run on the Islamic finance regulations in the country key among them being the ATB. In the Kingdom of Saudi Arabia, however, Islam is the dominant religion, and all financial institutions are run based on the doctrines of the Islamic faith. Australia is a good sample of a non-Islamic country with Islamic financial institutions, which, therefore, offers a fair basis on which financial institutions of purely Islamic countries, such as Saudi Arabia, can be compared.
In Saudi Arabia, financial institutions exist to offer financial services, which are the basis upon which they are built. There are quite a several banks and other financial institutions, such as tax expert groups, that offer their services to the population purely to accrue profits (Bines & Thel 2004). However, in Australia, things are different as those financial institutions exist mainly to promote Islamic religion while operating on the religious belief of brotherhood. They make profits just like any other market player, but this is not their main objective.
Causes and extent of the problem
Islamic banks use loaning services to attract customers. Their rates are a lot lower than those of the other banks (ibid). They also offer high-interest rates on deposits. Some Islamic banks welcome customers from other religions to open accounts and deposit their cash with them but when it comes to accessing some other services like the previously mentioned loans, the underlying terms get into play. These conditions often favor Muslims, and in some cases, the need to obtain the services often compels some of the customers to convert to Islam to get more lucrative conditions (Saeed 1996).
Australian financial institutions pay extra attention to offering aid at the expense of making profits, but all these efforts are implemented with a hidden aim of not just practicing corporate-social responsibility but marketing the organization and winning more popularity (Lane 2005).
Extent and severity of the problem
The use of such social sites as Facebook, Twitter, MySpace, among others, are banned in Saudi Arabia for the main reason that such sites erode culture. This, therefore, means that opportunities offered by social networks are not exploited by banks or financial institutions in the country. This is a belief that is not only held in the Kingdom of Saudi Arabia but by Muslims all over the world. The policy of not using social sites to advertise their services thus applies even to their firms outside Saudi Arabia or in any other non-Islamic nation, including Australia. However, this position is being disputed as demonstrated by the recent riots that are witnessed in several Arab countries in Africa and Asia (Rammal & Zurbrueg 2007).
The Australian GDP is $ 66,984 while that of Saudi Arabia is $ 17,000. The difference is a result of the fact that Australia exports more products to more markets than Saudi Arabia, which entirely relies on the export of oil, does. In Australia, the diversification of the economy is better presented and thus more preferred by many other countries globally than the Saudi Arabian dependence on the export of a single product (Megalogenis 2010).
Justification for research and Elaboration of issue
All businesses run in society and the policies governing whichever business one seeks to set up must always put into consideration the socially responsive investment. This is normally referred to as giving back to society (Mansley 2000). In the past, Rajhi bank in the Kingdom of Saudi Arabia has taken part in several charitable activities, some of which include donations to hospitals and children’s homes.
Such activities are normally budgeted for within the annual budgets of the institution and have to run in correspondence with it. The impromptu occurrences, such as the fires and tsunamis, that harm the nation and, thereby, compel the institutions to offer their assistance must always be properly met and put into consideration unless the firm incurs losses. The Islamic financial institutions in non-Muslim areas are a case at hand; Australia spends more doing these charity works as their policies are designed to sustain this course.
To determine the difference between policies applied in these two markets.
To establish the difference in the structure of the more similar financial institutions operating in the two differing environment.
In data collection, the research process will use three means:
Use of questionnaires; these will be distributed and filled by the research subjects who will prove hard to find and hold an interview with.
Observation of such activities as advertising in these two markets will be of immense contribution. The differences in the manner that policies apply in these two markets will also be of utmost interest.
The main method of data collection will be interviewed. The use of structured open-ended questions will be of much help to enable interviewees to give as much response as they as they will be willing to offer.
Bines, HE & Thel, S 2004, Investment Management Law and Regulation, Second Edition, Aspen, London.
Lane, MJ 2005, Socially Responsible Investing: An Institutional Investorâs Guide,Euromoney. London Aspen, London.
Mansley, M 2000, Socially Responsible Investment: a Guide for Pension Funds and Institutional Investors, Monitor Press, London.
Megalogenis, G 2010, ‘The Green and the Grey’, Quarterly Essay, vol.28 no.1, pp.22-25.
Rammal, HG & Zurbrueg, R 2007, ‘Awareness of Islamic Banking Products among Muslims: The Case of Australia’, Journal of Services Marketing, 12 no.1, pp.65-74.
Saeed, A 1996, Islam Banking and Interest: A Study of the Prohibition of Riba and Its Contemporary Interpretation, E.J. Brill, Leiden-London.