Encouraged by the recent economic downturn, business schools and their students are considering the option of specializing in Islamic finance in order to diversify their skills, thus appealing to a rapidly growing international financial market. “The Islamic finance industry has been growing at a rapid rate over the past two decades, with assets in that sector now in excess of $1 trillion,” explains Walid Hejazi, associate professor of International Business at Rotman School of Management at the University of Toronto, Canada. “Although these assets are concentrated in the Middle East and Asia, there is an increasing participation by US, European and Australian businesses in the sector, with Canada lagging significantly.” Islamic finance in international corporations In fact, with major financial corporations based in non-Islamic countries opening up Islamic finance departments to specifically cater for their business interests in Shariah compliant countries, as well as residents of those countries living abroad, many experts believe the importance of specializing in Islamic finance on MBA programs will increase in the coming years. “Most major banks have either already established or are looking to open Islamic finance windows in their retail and investment arms in the immediate to near future. The demand to seek out graduates who can understand the novelty and complexity of the Islamic finance market is at an all-time high,” explains Dr. Omneya Abdelsalam, senior lecturer and director of the El Shaarani Islamic Business and Finance (EIBF) Research Center at Aston Business School in the UK. “All of the ‘Big Four' auditing firms (PriceWaterhouseCoopers, KPMG, Ernst & Young, and Deloitte) have established their own independent Islamic finance divisions, and there is a long list of international financial services companies (for example HSBC, Deutsche Bank, UBS, among others) which are starting to enter into wholesale trade and investment in the Shariah compliant market.” A UK home for Islamic finance With its first MBA specialization in Islamic finance due to commence in October 2011, Dr. Abdelsalam's EIBF Research Center at Aston Business School was the first dedicated study center for Islamic finance at a recognized institution in Europe. As both Durham Business School and Bangor Business School are due to follow suit, the UK's business education sector is clearly taking the importance of studying Islamic finance seriously. Currently, five European business schools, all located in the UK, either offer, or plan to offer MBA electives in Islamic finance: Aston Business School, Bangor Business School, the University of Aberdeen Business School, Greenwich University Business School, plus the privately operated London School of Business and Finance. The London-based Cass Business School also offer it as an Executive MBA specialization from their Dubai location, which became the first ever MBA with an Islamic finance element when launched in 2007. Iqbal Asaria, visiting lecturer at Cass Business School who teaches the module, points out that the financial crisis experienced by Western economies has helped significantly in the growing popularity of Islamic finance as an alternative financial system, where risk is shared between lenders and borrowers, and any form of interest is banned. “Given the growth of Islamic finance it is increasingly important for MBA students to study this subject to get a well rounded exposure to current trends in finance. This has become doubly important post the crisis in conventional finance,” says Asaria. Dubai's financial impact Rotman's Hejazi agrees, arguing that the recent economic problems in Dubai have helped Islamic finance to evolve, so that it no longer caters purely for those of Islamic faith. “The difficulties in Dubai in some sense were fortunate in that they have forced the Islamic finance industry to both develop and communicate the governance issues around Shariah compliant financial securities... this is part of the maturing process.” With Islamic finance's emphasis upon shared risk, and alternative methods of benefiting from personal wealth, it's little wonder why economically damaged Western countries find the principles of the system appealing. However, whether MBA students following Islamic finance courses in Western nations are truly international, or are made up of a majority of Islamic expatriate students, keen on returning to their home-country after graduation remains to be seen. Richard Burns is a regular contributor to TopMBA.com
