www.researchgate.net
Open in
urlscan Pro
2606:4700::6811:2069
Public Scan
Submitted URL: https://cutt.us/oMVEc
Effective URL: https://www.researchgate.net/publication/357255558_Islamic_Finance_in_the_Kingdom_of_Saudi_Arabia_Opportunities_and_Challenge...
Submission: On December 23 via manual from SA — Scanned from US
Effective URL: https://www.researchgate.net/publication/357255558_Islamic_Finance_in_the_Kingdom_of_Saudi_Arabia_Opportunities_and_Challenge...
Submission: On December 23 via manual from SA — Scanned from US
Form analysis 3 forms found in the DOM
GET search
<form method="GET" action="search" class="lite-page__header-search-input-wrapper"><input type="hidden" name="context" readonly="" value="publicSearchHeader"><input placeholder="Search for publications, researchers, or questions" name="q"
autocomplete="off" class="lite-page__header-search-input"><button
class="nova-legacy-c-button nova-legacy-c-button--align-center nova-legacy-c-button--radius-m nova-legacy-c-button--size-m nova-legacy-c-button--color-green nova-legacy-c-button--theme-bare nova-legacy-c-button--width-square lite-page__header-search-button"
type="submit"><span class="nova-legacy-c-button__label"><svg aria-hidden="true" class="nova-legacy-e-icon nova-legacy-e-icon--size-s nova-legacy-e-icon--theme-bare nova-legacy-e-icon--color-inherit nova-legacy-e-icon--luminosity-medium">
<use xlink:href="/m/4387244343154291/images/icons/nova/icon-stack-s.svg#magnifier-s"></use>
</svg></span></button></form>Name: loginForm — POST https://www.researchgate.net/login?_sg=WNqzlUhSNLgKJL7xNLt1VbMrwVbUya8RbGRhNqWeMHw96EHv-qCZhywVv8TCePaM7P6rOo3_-G-kGw
<form method="post" action="https://www.researchgate.net/login?_sg=WNqzlUhSNLgKJL7xNLt1VbMrwVbUya8RbGRhNqWeMHw96EHv-qCZhywVv8TCePaM7P6rOo3_-G-kGw" name="loginForm" id="headerLoginForm"><input type="hidden" name="request_token"
value="aad-3LZme6yebZEPfXKo+WxNU0cVGE2D4JfToR+OAylmc5IFTdn3gcKIFDkLePHSle32gzhKqdAs3avBIs08SdhfRgRtqW5rLqONcn++XIPk3ZoTWuHNE8hjdRbHoeMX0hHfTcy4FsVEN6ZasfSTyStvCu3HVRfhfv5LsIFF8Y9vA5/ZDF0KNaEUKsqtjKan8xb/Pen9KxXloTak6dDZs59EH5GsztIGPQpjuVZ9D2pm0TFbvUF1vl6wMHKVq69EkvZ2HNR5SdLcNYEJJaTREns="><input
type="hidden" name="urlAfterLogin" value="publication/357255558_Islamic_Finance_in_the_Kingdom_of_Saudi_Arabia_Opportunities_and_Challenges_during2010-2017"><input type="hidden" name="invalidPasswordCount" value="0"><input type="hidden"
name="headerLogin" value="yes">
<div class="lite-page__header-login-item"><label class="nova-legacy-e-text nova-legacy-e-text--size-m nova-legacy-e-text--family-sans-serif nova-legacy-e-text--spacing-none nova-legacy-e-text--color-inherit lite-page__header-login-label"
for="input-header-login">Email <div class="lite-page-tooltip "><svg aria-hidden="true" class="nova-legacy-e-icon nova-legacy-e-icon--size-s nova-legacy-e-icon--theme-bare nova-legacy-e-icon--color-inherit nova-legacy-e-icon--luminosity-medium">
<use xlink:href="/m/4387244343154291/images/icons/nova/icon-stack-s.svg#info-circle-s"></use>
</svg>
<div class="lite-page-tooltip__content lite-page-tooltip__content--above">
<div class="nova-legacy-e-text nova-legacy-e-text--size-s nova-legacy-e-text--family-sans-serif nova-legacy-e-text--spacing-none nova-legacy-e-text--color-inherit"><b>Tip:</b> Most researchers use their institutional email address as their
ResearchGate login</div>
<div class="lite-page-tooltip__arrow lite-page-tooltip__arrow--above">
<div class="lite-page-tooltip__arrow-tip"></div>
</div>
</div>
</div></label></div><input type="email" required="" id="input-header-login" name="login" autocomplete="email" tabindex="1" placeholder=""
class="nova-legacy-e-input__field nova-legacy-e-input__field--size-m lite-page__header-login-item nova-legacy-e-input__ambient nova-legacy-e-input__ambient--theme-default">
<div class="lite-page__header-login-item"><label class="lite-page__header-login-label"
for="input-header-password">Password</label><a class="nova-legacy-e-link nova-legacy-e-link--color-blue nova-legacy-e-link--theme-bare lite-page__header-login-forgot" href="application.LostPassword.html">Forgot password?</a></div><input
type="password" required="" id="input-header-password" name="password" autocomplete="current-password" tabindex="2" placeholder=""
class="nova-legacy-e-input__field nova-legacy-e-input__field--size-m lite-page__header-login-item nova-legacy-e-input__ambient nova-legacy-e-input__ambient--theme-default">
<div><label class="nova-legacy-e-checkbox lite-page__header-login-checkbox"><input type="checkbox" class="nova-legacy-e-checkbox__input" aria-invalid="false" name="setLoginCookie" tabindex="3" value="yes" checked=""><span
class="nova-legacy-e-checkbox__checkmark"></span><span class="nova-legacy-e-checkbox__label"> Keep me logged in</span></label></div>
<div
class="nova-legacy-l-flex__item nova-legacy-l-flex nova-legacy-l-flex--gutter-m nova-legacy-l-flex--direction-column@s-up nova-legacy-l-flex--align-items-stretch@s-up nova-legacy-l-flex--justify-content-center@s-up nova-legacy-l-flex--wrap-nowrap@s-up">
<div class="nova-legacy-l-flex__item"><button
class="nova-legacy-c-button nova-legacy-c-button--align-center nova-legacy-c-button--radius-m nova-legacy-c-button--size-m nova-legacy-c-button--color-blue nova-legacy-c-button--theme-solid nova-legacy-c-button--width-full" type="submit"
tabindex="4"><span class="nova-legacy-c-button__label">Log in</span></button></div>
<div class="nova-legacy-l-flex__item nova-legacy-l-flex__item--align-self-center@s-up">
<div class="nova-legacy-e-text nova-legacy-e-text--size-s nova-legacy-e-text--family-sans-serif nova-legacy-e-text--spacing-none nova-legacy-e-text--color-inherit">or</div>
</div>
<div class="nova-legacy-l-flex__item">
<div
class="nova-legacy-l-flex__item nova-legacy-l-flex nova-legacy-l-flex--gutter-m nova-legacy-l-flex--direction-column@s-up nova-legacy-l-flex--align-items-center@s-up nova-legacy-l-flex--justify-content-flex-start@s-up nova-legacy-l-flex--wrap-nowrap@s-up">
<div class="nova-legacy-l-flex__item">
<a href="connector/google"><div style="display:inline-block;width:247px;height:40px;text-align:left;border-radius:2px;white-space:nowrap;color:#444;background:#4285F4"><span style="margin:1px 0 0 1px;display:inline-block;vertical-align:middle;width:38px;height:38px;background:url('images/socialNetworks/logos-official-2019-05/google-logo.svg') transparent 50% no-repeat"></span><span style="color:#FFF;display:inline-block;vertical-align:middle;padding-left:15px;padding-right:42px;font-size:16px;font-family:Roboto, sans-serif">Continue with Google</span></div></a>
</div>
</div>
</div>
</div>
</form>Name: loginForm — POST https://www.researchgate.net/login?_sg=WNqzlUhSNLgKJL7xNLt1VbMrwVbUya8RbGRhNqWeMHw96EHv-qCZhywVv8TCePaM7P6rOo3_-G-kGw
<form method="post" action="https://www.researchgate.net/login?_sg=WNqzlUhSNLgKJL7xNLt1VbMrwVbUya8RbGRhNqWeMHw96EHv-qCZhywVv8TCePaM7P6rOo3_-G-kGw" name="loginForm" id="modalLoginForm"><input type="hidden" name="request_token"
value="aad-3LZme6yebZEPfXKo+WxNU0cVGE2D4JfToR+OAylmc5IFTdn3gcKIFDkLePHSle32gzhKqdAs3avBIs08SdhfRgRtqW5rLqONcn++XIPk3ZoTWuHNE8hjdRbHoeMX0hHfTcy4FsVEN6ZasfSTyStvCu3HVRfhfv5LsIFF8Y9vA5/ZDF0KNaEUKsqtjKan8xb/Pen9KxXloTak6dDZs59EH5GsztIGPQpjuVZ9D2pm0TFbvUF1vl6wMHKVq69EkvZ2HNR5SdLcNYEJJaTREns="><input
type="hidden" name="urlAfterLogin" value="publication/357255558_Islamic_Finance_in_the_Kingdom_of_Saudi_Arabia_Opportunities_and_Challenges_during2010-2017"><input type="hidden" name="invalidPasswordCount" value="0"><input type="hidden"
name="modalLogin" value="yes">
<div class="nova-legacy-l-form-group nova-legacy-l-form-group--layout-stack nova-legacy-l-form-group--gutter-s">
<div class="nova-legacy-l-form-group__item nova-legacy-l-form-group__item--width-auto@m-up"><label
class="nova-legacy-e-text nova-legacy-e-text--size-m nova-legacy-e-text--family-sans-serif nova-legacy-e-text--spacing-xxs nova-legacy-e-text--color-inherit nova-legacy-e-label" for="input-modal-login-label"><span
class="nova-legacy-e-label__text">Email <div class="lite-page-tooltip "><span class="nova-legacy-e-text nova-legacy-e-text--size-m nova-legacy-e-text--family-sans-serif nova-legacy-e-text--spacing-none nova-legacy-e-text--color-grey-500">·
Hint</span>
<div class="lite-page-tooltip__content lite-page-tooltip__content--above">
<div class="nova-legacy-e-text nova-legacy-e-text--size-s nova-legacy-e-text--family-sans-serif nova-legacy-e-text--spacing-none nova-legacy-e-text--color-inherit"><b>Tip:</b> Most researchers use their institutional email address as
their ResearchGate login</div>
<div class="lite-page-tooltip__arrow lite-page-tooltip__arrow--above">
<div class="lite-page-tooltip__arrow-tip"></div>
</div>
</div>
</div></span></label><input type="email" required="" id="input-modal-login" name="login" autocomplete="email" tabindex="1" placeholder="Enter your email"
class="nova-legacy-e-input__field nova-legacy-e-input__field--size-m nova-legacy-e-input__ambient nova-legacy-e-input__ambient--theme-default"></div>
<div class="nova-legacy-l-form-group__item nova-legacy-l-form-group__item--width-auto@m-up">
<div class="lite-page-modal__forgot"><label class="nova-legacy-e-text nova-legacy-e-text--size-m nova-legacy-e-text--family-sans-serif nova-legacy-e-text--spacing-xxs nova-legacy-e-text--color-inherit nova-legacy-e-label"
for="input-modal-password-label"><span
class="nova-legacy-e-label__text">Password</span></label><a class="nova-legacy-e-link nova-legacy-e-link--color-blue nova-legacy-e-link--theme-bare lite-page-modal__forgot-link" href="application.LostPassword.html">Forgot password?</a>
</div><input type="password" required="" id="input-modal-password" name="password" autocomplete="current-password" tabindex="2" placeholder=""
class="nova-legacy-e-input__field nova-legacy-e-input__field--size-m nova-legacy-e-input__ambient nova-legacy-e-input__ambient--theme-default">
</div>
<div class="nova-legacy-l-form-group__item nova-legacy-l-form-group__item--width-auto@m-up">
<div><label class="nova-legacy-e-checkbox"><input type="checkbox" class="nova-legacy-e-checkbox__input" aria-invalid="false" checked="" value="yes" name="setLoginCookie" tabindex="3"><span class="nova-legacy-e-checkbox__checkmark"></span><span
class="nova-legacy-e-checkbox__label"> Keep me logged in</span></label></div>
</div>
<div class="nova-legacy-l-form-group__item nova-legacy-l-form-group__item--width-auto@m-up"><button
class="nova-legacy-c-button nova-legacy-c-button--align-center nova-legacy-c-button--radius-m nova-legacy-c-button--size-m nova-legacy-c-button--color-blue nova-legacy-c-button--theme-solid nova-legacy-c-button--width-full" type="submit"
tabindex="4"><span class="nova-legacy-c-button__label">Log in</span></button></div>
<div class="nova-legacy-l-form-group__item nova-legacy-l-form-group__item--width-auto@m-up">
<div
class="nova-legacy-l-flex__item nova-legacy-l-flex nova-legacy-l-flex--gutter-m nova-legacy-l-flex--direction-column@s-up nova-legacy-l-flex--align-items-center@s-up nova-legacy-l-flex--justify-content-flex-start@s-up nova-legacy-l-flex--wrap-nowrap@s-up">
<div class="nova-legacy-l-flex__item">
<div class="nova-legacy-e-text nova-legacy-e-text--size-s nova-legacy-e-text--family-sans-serif nova-legacy-e-text--spacing-none nova-legacy-e-text--color-inherit">or</div>
</div>
<div class="nova-legacy-l-flex__item">
<div
class="nova-legacy-l-flex__item nova-legacy-l-flex nova-legacy-l-flex--gutter-m nova-legacy-l-flex--direction-column@s-up nova-legacy-l-flex--align-items-center@s-up nova-legacy-l-flex--justify-content-flex-start@s-up nova-legacy-l-flex--wrap-nowrap@s-up">
<div class="nova-legacy-l-flex__item">
<a href="connector/google"><div style="display:inline-block;width:247px;height:40px;text-align:left;border-radius:2px;white-space:nowrap;color:#444;background:#4285F4"><span style="margin:1px 0 0 1px;display:inline-block;vertical-align:middle;width:38px;height:38px;background:url('images/socialNetworks/logos-official-2019-05/google-logo.svg') transparent 50% no-repeat"></span><span style="color:#FFF;display:inline-block;vertical-align:middle;padding-left:15px;padding-right:42px;font-size:16px;font-family:Roboto, sans-serif">Continue with Google</span></div></a>
</div>
</div>
</div>
<div class="nova-legacy-l-flex__item">
<div class="nova-legacy-e-text nova-legacy-e-text--size-s nova-legacy-e-text--family-sans-serif nova-legacy-e-text--spacing-none nova-legacy-e-text--color-grey-500 lite-page-center">No account?
<a class="nova-legacy-e-link nova-legacy-e-link--color-blue nova-legacy-e-link--theme-decorated" href="signup.SignUp.html?hdrsu=1&_sg%5B0%5D=CU4bJkWYuAjQEIObXQSa2ARizeeox0NXk77v50Q62tcu4_fThEnL2JzM_UAUsQUEgzOdGyCGwJ1KGJBiSNh3VbaIjjc">Sign up</a>
</div>
</div>
</div>
</div>
</div>
</form>Text Content
ArticlePDF Available ISLAMIC FINANCE IN THE KINGDOM OF SAUDI ARABIA: OPPORTUNITIES AND CHALLENGES DURING(2010-2017) * December 2021 * Project: Islamic Finance Authors: Abdulkarim Fadul Abdulkarim Fadul * This person is not on ResearchGate, or hasn't claimed this research yet. Fadul Albashir * Islamic Economics Institute Download full-text PDFRead full-text Download full-text PDF Read full-text Download citation Copy link Link copied Read full-text Download citation Copy link Link copied References (3) ABSTRACT This paper reviews the assets and components of Islamic finance in the Kingdom* in its main sectors, namely Islamic banking, Takaful, Sukuk, and Islamic investment funds. This paper focuses on presenting and analyzing the opportunities and challenges of Islamic finance in the Saudi market and its future in light of the competition to lead the global Islamic finance sector that has emerged in some capitals and countries. This paper also analyzes and discusses the requirements for developing and improving the environment of the Islamic financial services industry in the Kingdom in order to be more consistent and in line with its role as a pioneer and a leader in Islamic finance. This paper will conclude some findings that, along with other future studies, can contribute to developing a vision that will help improving this industry to match the Kingdom's leadership in this field. Furthermore, it shall work to enhance the efforts of the regulatory and supervisory authorities in related with the banking sector in Saudi Arabia, so that this industry can attain the highest ranks in the global competitiveness ranking in Islamic finance. Discover the world's research * 20+ million members * 135+ million publications * 700k+ research projects Join for free Public Full-text 1 Content uploaded by Fadul Albashir Author content All content in this area was uploaded by Fadul Albashir on Dec 22, 2021 Content may be subject to copyright. 1 Islamic Finance in the Kingdom of Saudi Arabia: Opportunities and Challenges during(2010-2017) Fadul Abdulkarim ALbashir Islamic Economics Institute King Abdulaziz University, Saudi Arabia Falbashir@kau,edu,sa Abstract This paper reviews the assets and components of Islamic finance in the Kingdom* in its main sectors, namely Islamic banking, Takaful, Sukuk, and Islamic investment funds. This paper focuses on presenting and analyzing the opportunities and challenges of Islamic finance in the Saudi market and its future in light of the competition to lead the global Islamic finance sector that has emerged in some capitals and countries. This paper also analyzes and discusses the requirements for developing and improving the environment of the Islamic financial services industry in the Kingdom in order to be more consistent and in line with its role as a pioneer and a leader in Islamic finance. This paper will conclude some findings that, along with other future studies, can contribute to developing a vision that will help improving this industry to match the Kingdom’s leadership in this field. Furthermore, it shall work to enhance the efforts of the regulatory and supervisory authorities in related with the banking sector in Saudi Arabia, so that this industry can attain the highest ranks in the global competitiveness ranking in Islamic finance. Keywords: Islamic finance, Kingdom of Saudi Arabia, Islamic banks, Sukuk, Takaful. * The terms “Kingdom” and “Saudi Arabia” are used interchangeably throughout this paper. 2 Introduction The Islamic financial services industry has grown significantly and spread wide in various geographical areas around the world. Its assets were estimated at about $1.87 trillion by the end of 2014, according to the report of the Islamic Financial Services Board Issued in May 2015. 1 The Kingdom of Saudi Arabia had an abundant share in this industry, as it is one of the largest contributors to its assets after Malaysia, with a total value estimated at $285 billion at the end of 2013 2 , constituting more than 30% of the total of these assets 3 . No wonder that the Kingdom has this great contribution, as it is characterized by a strong economy, both at the regional and global levels. The Competitiveness Report issued by the World Economic Forum for the year2014; which included 148 countries around the world, revealed that the Kingdom’s economy occupies the 20th rank globally, maintaining its position among the top 20 economies in the world. 4 In addition, Fitch Ratings has raised the Kingdom’s sovereign rating to a higher degree (AA-) with a positive outlook. Moreover, Saudi Arabia is a leading country in Islamic economics and finance, from which the First International Conference on Islamic Economy had launched during the period from 21 to 26 Safar 1396 H, corresponding to 21-26 February 1976 G, which constituted the first nucleus of Islamic economy in the institutional concept. This conference was followed by the establishment of many research centers and academic departments in the universities around the Kingdom, which played a major role in spreading Islamic economics and finance until Islamic finance became an arena for competition between the capitals of countries. 5 Despite the leadership of the Kingdom of Saudi Arabia in Islamic economics and finance; and its significant contribution to their assets, it has fallen behind in some points related to the Islamic financial services industry, according to the Competitiveness Report of the Islamic Financial Industry issued by Thomson Reuters 6 in 2013. Therefore, this study came as an attempt to answer the following question: How can the Islamic finance environment in the Kingdom of Saudi Arabia become more competitive and compatible with its leadership in Islamic economics and finance worldwide? From the main question, the following questions arise: How can this environment be improved and developed to represent the Kingdom's leadership and its contribution to the assets of the Islamic financial industry? What are the opportunities available to this industry, and the challenges it faces in the Saudi market? Therefore, this study aims to present and analyze the capabilities available in the Kingdom of Saudi Arabia in the Islamic financial services industry, and set some parameters and features to improve the Kingdom’s competitiveness in this industry. The importance of this study is based on its content and presentation of the great advantages that the Kingdom of Saudi Arabia enjoys in the Islamic finance industry. We hope that Islamic financial institutions and research centers related to the Islamic economy will benefit from it. 1 Islamic Industry Services Financial Stability Report, p. 7. May 2015. 2 ." World Islamic Banking Competitiveness Report, p4. 2012. 3 Ibid. p4. 4 Competitiveness Report 2014, World Economic Forum, p. 3 5 Fadul AbdulKarim Mohamed. Contemporary International Applications on the Transition Towards Islamic Economics and Finance: the Competitiveness of Islamic Economic Capitals as a Model, a paper presented at the Islamic Economic Jurisprudence Forum in the United Arab Emirates during the period 2-4 Jumada II 1436 H, corresponding to March 22-24, 2015. Four capitals are currently competing to lead the Islamic economy: London, Kuala Lumpur, Manama and Dubai. 6 Thomson Reuters Islamic finance development report 2013. P. 4 3 The inductive approach and the analytical description will be the basis for this study. In this paper, we will cover the Islamic finance in the Kingdom of Saudi Arabia in terms of its historical context, development and growth over time. This is based on published reports by the Saudi Central Bank (SAMA) on the four sectors of the Islamic financial services industry: Islamic banks, Takaful, Sukuk, and Islamic investment funds, including their annual reports. Some aspects of previous studies on this subject shall provide some information and knowledge that can be useful, despite its scarcity, based on what we have found in various sources. Among these studies are the following: 1- A study by Nagham Hussein Nehme and Raghad Muhammad Najm, titled: "Islamic Banks and Financial Institutions in The Gulf Cooperation Council Countries: Reality and Challenges 7 . The study concluded with a set of findings, including: The increasing interest of traditional commercial banks to open Islamic branches is due to different motives, such as competition and imitation, in addition to the desire to achieve rewarding returns. The study also evaluated the experience of the GCC countries in the field of Islamic banking, and concluded that it is a distinct experience, as their financial institutions played a key role in the development of the Islamic financial industry. 2- A study by Muhammad Mahmoud Abdullah Yousef, titled: “Islamic Banks in Kuwait” 8 and the study concluded that the role of Islamic banks is growing and their superiority over conventional banks in Kuwait, and their ability to face global crises through their legitimate investments and development programs. 3- A study by Mustafa Ibrahim Muhammad Mustafa, titled: “Evaluation of the phenomenon of Converting Traditional Banks to Islamic Bank – An Applied Study on the Experience of Some Saudi Banks” 9 . The study concluded that a the officials of a traditional bank that wishes to be converted into an Islamic bank must have the intention and sincere will for the conversion process, and express this will in the form of a strategic plan with defined and declared stages from the outset. In addition, it should have a sufficient support from the senior management of the bank and an endorsement and support from the supervisory authorities so that the conversion process can reach its desired objectives. The study then proposed a model for converting a traditional bank branch into an Islamic bank branch according to a multi-stage scheduled plan. 4- A study by Bintawin Samar Saud 10 , which aim was to analyze the performance of banks in the Kingdom of Saudi Arabia, and for this purpose, the financial statements of a sample of 11 banks were analyzed during the period 2005-2009. The study concluded a number of findings, including: The Saudi banking sector – Islamic and traditional – has the largest percentage of assets in GCC countries. The rapid growth of the Islamic 7 Nagham Hussein Neama and Raghad Mohamed Negm. Islamic Banks and Financial Institutions in the Gulf Cooperation Council Countries: Reality and Challenges. Al-Qadisiyah Journal of Administrative and Economic Sciences, Volume 12, v. 2, 2010 8 Mohamed Mahmoud Abdullah Youssef, Faculty of Urban Planning – Cairo University, unpublished paper. 9 Mustafa Ibrahim Muhammad Mustafa, titled: “Evaluation of the phenomenon of Converting Traditional Banks to Islamic Bank – An Applied Study on the Experience of Some Saudi Banks Master's Thesis submitted to the Department of Islamic Economics, American Open University, 2006 10 BINTAWIM Samar Saud. Banking sector Performance Analysis of Islamic Banking: Some Evidence. * That period witnessed the construction of the Berlin Wall in 1961, the outbreak of the Cuban Crisis in October 1962, and the Cold War had reached its climax. Gradually the world split into two camps, one aligned with the United States of America, and the other with the Soviet Union. Many third world regions became the subject of competition. 4 banking system creates a kind of competition in the banking market, in addition, banks with large capitals develop and perform better than medium-sized banks. 5- A study by Al-Khathlan and Abdul-Malik, titled: "Analysis of Financial Performance in Saudi Banks during the period 2003-2007 using Simple Linear Regression Analysis". The study was conducted on a sample of six commercial banks in the Kingdom, and showed that there is a positive relationship between financial performance and the size of assets. Reviewing previous studies revealed that most of them deal with issues related to the analysis and measurement of financial performance in the banks of the Kingdom of Saudi Arabia in order to reach financial results. The objective of this study may be different, and this is what distinguishes it. 1- Islamic Finance in the Kingdom: Its Historical Context, Scale and Development 1-1 Historical Context Allah the Almighty has honored the Kingdom of Saudi Arabia to be the incubator of the Islamic economy during the global struggle in 1960s, which took on an ideological character, one of its axes being the economy.* This struggle was reflected in many aspects of life; cultural and educational in the Arab and Islamic world. Universities were studying capitalist and socialist economics – not the Islamic economics – in the faculties of economics and administration 11 . Any mention to the Islamic economics at that time was a kind of fiction, until Allah the Almighty inspired the official in charge of Al-Azhar University to teach Islamic economics in 1961 as a sub-curriculum 12 . King Abdulaziz University in Jeddah follow the steps of Al-Azhar University, as the College of Economics and Administration began teaching Islamic economics in 1964 13 . Then the recommendation of the 7th Conference of Muslim Scholars, held in Cairo in 1972, came to support that Islamic economics should be taught in various institutes and universities of the Islamic world. This recommendation was not implemented until after the First World Conference on Islamic Economics held in February 1976 14 , then Omdurman Islamic University in Sudan applied it in 1965. 15 In 1969, the landmarks of the Kingdom’s historical connection to the Islamic economy appeared evidently after Al-Aqsa Mosque Fire on 21/08/1969*, which was a reason for the 11 Muhammad Shawqi Al-Fangari Economic Doctrine in Islam, published research in the book of the First World Conference on Islamic Economics, International Center for Islamic Economics Research, 1, 1400 H - 1980 G, p. 73 12 Muhammad Shawqi Al-Fangari, Al-Wajeez in Islamic Economics, Dar Al-Shorouk, Cairo 1994, pp. 6-5 The university decided to teach Islamic economics in two faculties, namely: the Faculty of Commerce (within the study subjects of the 4th year in the Bachelor’s Department), and the Faculty of Sharia (within the diploma subjects), and the Department of Graduate Studies which teaches "Sharia Policy". 13 Ibid 14 Ibid p 6 15 Ezz El-Din Malik El-Tayeb. Curricula and Formulation of Islamic Macroeconomic Theory, Khartoum, J Town Press, 1428 H/2008 G, p.11. * A huge fire broke out in the eastern wing of the Al-Qibli Mosque, located on the southern side of Al-Aqsa Mosque, on August 21, 1969. The fire consumed the entire contents of the wing, including theMinbar of Salah Al-Din (pulpit). The fire also threatened the mosque’s archaeological dome made of pure silver. This crime, orchestrated by Michael Deans caused chaos in the world, and sparked an angry revolution throughout the Islamic world. ** Two currents appeared in the conference; the first called for the establishment of a permanent international organization for Islamic countries that would have its general secretariat, and the second believed that the conference should be limited to discussing the Palestinian cause only, and to reconcile the two points of view it was agreed to consult the governments of the member states in order to cooperate closely in various fields. 5 Islamic countries to call for a summit to discuss this issue, as the first Islamic conference of kings and presidents was held on 22/09/1969 in Rabat.** Two proposals to the foreign ministers of Islamic countries were presented by Pakistan and Egypt to establish an Islamic bank and a union for Islamic banks. Egypt was entrusted with preparing a comprehensive study on the two proposals. The issuance of the Statement of Intent issued by the Conference of Finance Ministers of Islamic Countries, in Jeddah, in Dhu al-Qa’dah 1393 H, corresponding to December 1973 G, had a great impact in forming the first core of Islamic banking, as one of the recommendations of that conference was the establishment of the Islamic Development Bank. 16 The Board of Governors of the Bank Meeting in Riyadh in Rajab 1395 H, corresponding to July 1975 G followed that; then the official opening of the Bank was announced on the 15th of Shawwal 1395 H, corresponding to the 20th of October 1975 G 17 and the Kingdom of Saudi Arabia made a significant contribution in the Bank's capital, at a rate of 24,86 %. 18 The Islamic Development Bank has played a prominent role in promoting and developing the Islamic financial industry through its five entities**, and contributed to the establishment of many financial institutions that are active in Islamic finance 19 . After the establishment of the Islamic Development Bank, the College of Economics and Administration at King Abdulaziz University in Jeddah, organized the First International Conference on Islamic Economics in Mecca, during the period 21-26 Safar 1396 H, corresponding to 21-26 February 1976 G, which gave a jumpstart to the efforts of the universities, charting the path of the institutional Islamic economics, since, prior to the conference, the writings on Islamic economics were scattered individual efforts; either written by jurists, or those concerned with Islamic studies, and they were dominated by general ideological assessments, and were presented to the educated public in the Islamic world 20 . The Conference recommended that King Abdulaziz University establish an international center for the study of Islamic economics, to be supervised by a supreme committee of international senior scholars and professors specialized in Sharia 21 , and that the subject of Islamic economics is taught in Arab and Islamic universities. To achieve this recommendation, the center was established in the middle of 1397 H, and it attracted a group of the earliest pioneers in Islamic economics 22 . It effectively contributed to the generation of a new kind of Islamic economics 16 Islamic Development Bank: A brief overview of the Islamic Development Bank Group. 1426, p.6 17 Ibid p.6 18 Ibid p. 8. The Kingdom contributed a large share in the capital of the Islamic Development Bank amounting to 624.028.000 Gold Dinars, and this amount is equivalent to 25% of the bank’s total capital, in addition to (50) million riyals as a contribution to building its permanent headquarters In Jeddah, in addition to the land on which the permanent headquarters of the Bank was established, and its area is 50 thousand square meters. The founding countries, the main shareholders in the Bank are: Saudi Arabia with a share of 25%, Libya with a share of 10.7%, Iran 9.32%, Egypt 9.22 % Turkey 8.41%, UAE 7.54%, Kuwait 7.11%, Pakistan 3.31%, Algeria 3.31), Indonesia 2.93%. ** The five entities that constitute the Islamic Development Bank Group are: the Islamic Development Bank, the Islamic Research and Training Institute, the Islamic Corporation for the Insurance of Investment and Export Credit, the Islamic Corporation for the Development of the Private Sector, and the International Islamic Trade Finance Corporation. The Islamic Development Bank Annual Report 2012, p.2 19 Ibid p. 71. Of these financial institutions, the Islamic Rating Agency and the Liquidity Management Center. 20 Islamic Development Bank. The development of Islamic Economics and the role of the Islamic Economics Research Center, a paper submitted by the Islamic Economics Research Center at King Abdulaziz University in Jeddah, on the occasion of being awarded the Islamic Bank Prize in the field of Islamic economics for the year 1423 H, .18 p. 21 The International Center for Islamic Economics Research. King Abdulaziz University, Selected Research from the First International Conference on Islamic Economics, 1st Edition, 1400 H – 1980 G, p. 552 22 Muhammad Najatullah Siddiqui, winner of the King Faisal International Prize, and Muhammad Anas Al-Zarqa, Rafeeq Al- Masry, Muhammad Ali Al-Qari, Muhammad Omar Zubair all of whom received the Islamic Development Bank Prize in Islamic Economics. Also, the Islamic Economics Research Center won the same award as a scientific institution in appreciation 6 literature, which is characterized as being written by specialists in economic sciences, deals in depth with specific issues, and takes into account related Jurisprudence provisions. After holding the first World Conference; Al-Imam Muhammad Ibn Saud Islamic University in Riyadh took the initiative to teach Islamic economics in two institutes affiliated with the university: the Higher Institute of Sharia Judiciary and the Higher Institute for Islamic Call starting from the 1977/1976 academic year 23 . Then the establishment of the Islamic Economics Division at the College of Sharia and Islamic Studies in Makkah followed the establishment of the Islamic Economics Research Center, and it was a branch of King Abdulaziz University in 1398 H, corresponding to 1977 G. After the approval of the establishment of Umm Al-Qura University in Makkah on 22/06/1401 H, the Department of Islamic Economics was established in 1401/1402 H 24 and the Imam Muhammad bin Saud Islamic University in Riyadh established the Department of Islamic Economics at the College of Sharia in 1399 H. 25 In the year 1401 H (1981 G), the Islamic Research and Training Institute, a member of the Islamic Development Bank Group, was established, and began its work in 1403 H/ 1983 G 26 . After four decades of work in the Islamic Economics Research Center, the Islamic Research and Training Institute, and with the support of many research centers specialized in Islamic economics 27 , and with the support of academic departments in many universities inside and outside the Kingdom, the Islamic economics has spread throughout the world, the Islamic finance industry, which is one of the applications of the Islamic economics, has become a competitive domain that world capitals compete to take the lead in this industry 28 . 1-2 The Kingdom’s Contribution to Islamic Finance Assets The Kingdom of Saudi Arabia is an active contributor to Islamic finance assets worldwide. Its contribution is estimated by about $285 billion at the end of 2012; according to the Young & Ernst Report 2013 and the Global Competitiveness Report in Islamic Banks. It constitutes more than 30% of the total of these assets around the world 29 . Saudi Arabia is also at the forefront of four countries that contribute about 80% of the volume of Islamic finance in the world; i.e. KSA, UAE, Iran and Malaysia. At the level of the GCC countries; the Young & Ernst report confirmed that Saudi Arabia constituted the largest market for Islamic finance with assets of $285 billion at the end of 2013,. Followed by the UAE with of its efforts in 1423 H. Muhammad Shawqi Al-Fangari. The Economic Doctrine in Islam, research published within the book of Islamic economics, selected papers from the First Conference on Islamic Economics, International Center for Islamic Economics Research, 1, 1400 AH - 1980 CE, p. 73 23 Muhammad Shawqi Al-Fangari. The Economic Doctrine in Islam, research published within the book of Islamic economics, selected papers from the First Conference on Islamic Economics, International Center for Islamic Economics Research, 1, 1400 H - 1980 G, p. 73 24 (Department of Islamic Economics, Umm Al-Qura University, Makkah Al-Mukarramah. College website: https://uqu.edu.sa/page/ar/ 25 University website: ttp://units.imamu.edu.sa/colleges/Economics/profile/Pages/default.aspx 26 Introduction to the Institute within the publications of the Islamic Research and Training Institute, Islamic Development Bank. 27 Saleh Kamel Center at Al-Azhar University, the Global Institute of Islamic Economics at the Islamic University of Pakistan, and the International University of Islamic Finance in Malaysia supported by the Central Bank of Malaysia and others. 28 Fadel Abdel Karim Mohamed. Applications of transformation in the Islamic Economy: the competitiveness of the capitals of the Islamic economy as a model, a paper presented in the Islamic Economics Fiqh Forum in the United Arab Emirates during the period 4-2 Jumada II 1436 H, corresponding to March 24-22, 2015 G. Two of these capitals competing for the leadership of Islamic finance: London, Dubai, Kuala Lumpur, and Manama. Saudi Arabia remained outside this the competition. 29 World Islamic Banking Competitiveness Report 2012, p4. 7 more than $80 billion then came Qatar with about $53 billion of the total value of Islamic banking assets in Gulf countries, which amounts to $452 billion. At the level of the Organization of Islamic Cooperation countries, whose membership accounts for 98% of the assets of Islamic finance worldwide 30 , the contribution of Saudi Arabia comes in second among these countries with about 13.9% by the end of 2011. In addition, Saudi Arabia is a member of committee and a decision maker in the Islamic Development Bank, as it donated the land on which the bank was established, and contributed 50 million Saudi riyals to its establishment costs 31 . The following figure shows the Kingdom’s contribution to Islamic finance worldwide. Figure (1): Top countries contributing to Islamic finance assets in billions of US dollars of the year 2012 Islamic finance development report 2013Thomson Reuters 2012, p. 25 It has enhanced the Kingdom's contribution to Islamic finance; the contribution of a number of Islamic financial institutions owned by two Saudi businessmen**, namely, His Royal Highness Prince Muhammad Al-Faisal bin Abdulaziz Al Saud, who founded Dar Al-Maal Al-Islami Trust in Switzerland in 1981 32 ; and His Excellency Sheikh Saleh Abdullah Kamel, who founded Dallah Investment and Development Co. in 1982, which was later changed to Dallah Al-Baraka Holding Company. 33 30 Islamic Finance in OIC Member Countries OIC Outlook Series May 2012, p.2 31 The official website of the Saudi Ministry of Finance on the web https://www.mof.gov.sa/Arabic/Pages/Home.aspx ** These institutions operate in several countries, including: Bahrain, Switzerland, Britain, Jordan Islamic Bank - the Hashemite Kingdom of Jordan. Saudi Egyptian Finance House - Arab Republic of Egypt., Al Baraka Turkish Finance House - Republic of Turkey, Al Baraka Bank - People's Democratic Republic of Algeria, Al Baraka Bank - South Africa. Tunisian Saudi Finance Bank - State of Tunisia, Al Baraka Bank - State of Lebanon, Al Baraka Islamic Bank - Kingdom of Bahrain. Al- Amin Bank - Kingdom of Bahrain. Al Baraka Bank - Republic of Sudan. 32 Annual Report: Dar Al-Maal Al-Islami Holding 2011, p.3 Al Baraka Banking Group. Annual Report of the Group.Al Baraka Group is a Bahraini joint stock company licensed as an Islamic wholesale bank by the Central Bank of Bahrain, established in mid-2002, with a paid-up capital of 1.5 billion US dollars, and aims to build a banking entity that competes with major global entities; It has more than $12 billion in assets; And its companies are more than 300 companies spread in more than 40 countries around the world. Annual Report: Dar Al-Maal Al-Islami Holding, 2011, p.4 33 Al Baraka Banking Group - Annual Report. Al Baraka Group is a Bahraini joint stock company licensed as an Islamic wholesale bank by the Central Bank of Bahrain, established in mid-2002, with a paid-up capital of $1.5 billion, and aims to build a banking entity that competes with major global entities; It has more than $12 billion in assets; And its companies are 411,512 269,736 185,323 118,446 81,455 71,062 47,246 37,665 33,155 17,503 0 50,000 100,000150,000200,000250,000300,000350,000400,000450,000 Malaysia Saudi Arabia Iran Arab Emarats Kuwait Qatar Bahrain Turkish Indonesia Bangladesh 8 The contributions of Dar Al-Maal Al-Islami Trust is represented in Islamic banking, various Islamic investment services, and Takaful insurance activities through its subsidiaries in Bahrain, Jordan, Egypt, Saudi Arabia and Malaysia 34 , in addition to providing Islamic banking services in several countries, including: Bahrain, Pakistan and Egypt. 35 The Trust's activity has also expanded in several other fields 36 , as it owns 54% of Ithmaar Bank, 49% of Faisal Islamic Bank in Egypt. and 25% of the Bank of Bahrain and Kuwait, in addition to the First Ijara Bank and Faisal Bank of Pakistan. 37 As for Al Baraka Banking Group, it owns 40 banks and financial institutions with assets of more than $4 billion spread in more than twenty countries around the world and carries out prominent activities in the framework of its promotion of Islamic finance activities; namely, organizing the annual Al-Baraka Symposium, which the group started in 1980 still hold it annually 38 , supporting many academic centers specialized in Islamic economics 39 , in addition to printing and translating references and the best books on Islamic economics 40 . 1-3 The Growth of the Islamic Finance Industry in the Kingdom of Saudi Arabia The Islamic finance industry in the Kingdom of Saudi Arabia has grown remarkably in recent years in its four sectors, “Banks, Sukuk, Investment Funds, and Takaful” 41 , as revealed by the following data: 1- At the end of 2014, and according to SAMA report No.51, the number of Islamic banks branches ,including Islamic units and windows in conventional banks, was 1450 branches out of the total number of 1899 branches * of national banks operating in the Saudi market. SAMA Report No. 51. The market share of the assets of Islamic banks increased to more than 53% of the total assets of banks operating in the Saudi market in 2013, compared to about 30% of assets in previous years 42 . more than 300 companies spread in more than 40 countries around the world. 34 Annual Report: Dar Al-Maal Al-Islami Trust, 2011, p.4 35 Ibid. p.4 36 Annual Report: Dar Al-Maal Al-Islami Trust 2011, p.4. Among these areas is the works of the real estate company affiliated with the Al-Ithmaar Bank, called “Naseej” and it is now working on a huge real estate project in Saudi Arabia with a budget of $500 million to construct housing units for middle-income “considering that they constitute attractive investment opportunities nowadays.” 37 Annual Report: Dar Al-Maal Al-Islami Trust. Ibid. 38 The number of seminars organized by Al Baraka Islamic Economics Group until the end of Ramadan 1435 H reached 36 seminars. Al Baraka Islamic Economics Seminar is considered a legal, banking and economic forum that contributes to the development of Islamic banking in context of the jurisprudential and technical aspects. 39 These centers include: The Islamic Economics Research Center at King Abdulaziz University in Jeddah (currently the Islamic Economics Institute), the Sheikh Saleh Kamel Center for Islamic Economics Research at Al-Azhar University in Cairo, the Sheikh Saleh Kamel Center for Islamic Economics Research in Uzbekistan and Kazakhstan, and the Sheikh Saleh Kamel Center for Islamic Economics Research in Jordan. 40 The number of issued books has reached more than (125) books, publications, and academic research, in addition to achievements in issuing and publishing banking fatwas. 41 The Islamic Financial Services Board Report. According to the classification of international reports specialized in Islamic finance, Islamic finance consists of banks, Sukuk, investment funds, and Takaful. (See, for example, the IFSB Annual Report) * SAMA report No. 51, 2015 p. 61 and collected statistics from Saudi bank reports, which indicate that the number of bank branches amounted to 1912, with an increase of 144 new branches of service income, and the Riyadh region have 586 branches, the Makkah region have 412 branches, and the Eastern region have 366 branches. 42 Global Islamic Banking Services Competitiveness Report 2013-2014 p.70 and Al Jazira Capital Report of the Saudi Banking and Financial Services Sector. December 2013 p. 20 9 2- The insurance sector in the Saudi market has grown significantly during the past seven years, as 33 insurance companies were licensed in 2012 to operate in the Saudi market 43 . The insurance market witnessed growth in 2014 in most of its indicators, as the subscribed insurance premiums increased by 20.8%, bringing the volume of insurance to SAR 30.5 billion at the end of 2014, compared to SAR 25.24 billion in 2013, an increase of SAR 5 billion, and a growth rate of about 20.8% 44 . Health and vehicle insurance constituted 77.9% of the total the subscribed insurance premiums in 2014 45 . 3- The volume of Islamic sukuk and bonds expanded significantly, as it amounted to SAR 32.5 billion by the end of 2014, according to SAMA report No. 51. The volume of sukuk and bonds trading amounted to SAR 108.1 million in 2014, while the nominal trading value of these sukuk and bonds amounted to 107.6 million riyals 46 . 4- Islamic investment funds have increased, reaching 147 Islamic funds managing financial assets of about $18 billion, according to a report by Lipper Research Group, a subsidiary of Thomson Reuters. 47 1-3-1 Islamic Banks SAMA has decided that banks in Saudi Arabia should operate according to the dual model that allows Islamic banks to work alongside traditional banks, and at the same time gave permission to traditional banks to practice Islamic banking through Islamic units or windows, provided that the regulations and laws are the same for both systems. Currently, four fully Islamic banks operate in the Kingdom of Saudi Arabia: Al-Rajhi Bank, Al- Jazira Bank, Al-Bilad Bank, and Al-Inma Bank. Together, these four banks constitute about (25%) of the total number of 12 national banks operating in the Saudi market 48 . In addition to these banks, there are many Islamic branches and windows in the traditional banks, which, in addition to these four mentioned banks, contributed to the Islamic banking system in the Kingdom of Saudi Arabia, with 1,450 branches by the end of 2014 49 , of which 745 are the total branches Islamic banks, and 705 Islamic windows in traditional banks. Based on these figures, Islamic branches constitute 50 (76.3%) of the total number of 1,899 branches of banks operating in the Kingdom by the end of December 2014 51 . The following figure shows the percentage of Islamic branches and windows in Saudi banks. 43 SAMA Report No. 49. 44 SAMA Report No. 51, 2015 p.75. This increase is mainly due to an increase in awareness of the importance of insurance in addition to mandatory vehicle insurance and cooperative health insurance 45 Ibid. p. 75 46 SAMA Report No. 51, 1436 H, p. 95 47 A report by Lipper Research Group, a Thomson Reuters company. 48 Report No. 49 SAMA, previous reference, p. 58 49 According to the data collected from the annual reports of these banks, except for the branches of the Samba Group (for lack of information on them), although there are statements indicating that the number of its Islamic branches comes in third place. 50 Collected statistics from the annual reports of banks operating in KSA 51 SAMA - Monthly Statistical Bulletin pp. 42-41, December 2014. 10 %23 %76.3 Figure (2) Islamic Branches and Windows in Saudi Banks Source: Prepared by the researcher according to the above data 1-3-1-1 Distinctive Characteristics of Islamic Banks in the Saudi Market Despite the small number of Islamic banks in the Saudi market, the latest financial reports reveal that they acquired more than 53% of the total assets of Saudi banks 52 , and the rate of return on their assets amounted to 4.3%, compared to 3.4% for traditional banks. Al Rajhi Bank achieved the highest return at the level of Saudi banks, ranging between 6-7% during the years 2013-2014, respectively 53 . Also, Islamic Sharia-compliant loans grew by 16.3% during the period 2007-2012, while the growth of loans was limited in traditional banks, by 9.8% 54 . The largest percentage of the market share in loans was held by Al-Rajhi Bank, reaching 17.1%. Furthermore, Al-Rajhi Bank ranked second in the market share in deposits, reaching 16.7% 55 , after the National Commercial Bank, which ranked first with a rate of 20.7%. Among the features that distinguish Islamic banks operating in the Saudi market is the increase in their profit rate compared to the profits of traditional banks, where the net rate of return for Islamic banks reached 4.1% compared to 2.9% for traditional banks. 56 In addition, Islamic banks enjoy capital adequacy that reached 18.5%, while the capital adequacy of traditional banks reached 15.2% in 2012 57 . The following figure shows the capital adequacy ratio in both Islamic and traditional systems in the banking sector in the Saudi market. 52 AlJazira Capital Report, Banking and Services Sector December 2013, p. 20 53 Annual Reports of Al-Rajahi Bank, 2013 - 2014. 54 AlJazira Capital, Ibid. 55 Ibid. 56 Ibid. 57 The capital adequacy ratio in Saudi banks amounted to 17.8%, according to the standards of the International Basel Committee. SAMA website – Chairman's Speech 11 82% 81% 80% 79% 78% 77% 76% 75% 74% 73% 72% Figure (3): Capital Adequacy Ratio for Islamic and Traditional Banks Source: AlJazira Capital - Banking Sector 2012 Among the characteristics of Islamic banks is their wide spread, as their branches covered the cities, villages and deserts of the Kingdom, with a total of 745 branches by the end of 2014, representing 39% of the total number of 1899 branches of Saudi banks. The following table shows the increase in the number of branches of Islamic banks. Table (1): Increase in the number of branches of Saudi Islamic banks during 2013-2014 Branches 2014 2013 22 + 501 479 Al Rajhi Bank 14 + 116 102 Al Bilad 5 + 70 65 AlJazera 4 + 58 54 AlInma 45 + 745 700 Total Source: The financial reports of the four Islamic banks for the years 2013-2014 The increase in the number of branches reflects the success achieved by Islamic banks in the Saudi market, which came as a result of the demand for their services This success is attributed to the fact that bank customers in Saudi Arabia prefer dealing with Islamic banks, despite the higher cost were in financing compared to conventional banks 58 . What supports this attitude is that all banks operating in the Saudi market tended to open Islamic units and windows, which constituted a large percentage of these banks’ branches, as shall be detailed. 58 Abdullah Qurban Turkistani et al. An unpublished study entitled Measuring the degree of customer satisfaction (individuals) about Islamic banking services and products in the Kingdom of Saudi Arabia, presented to the Asia and Pacific University in Japan, 1432 H. 12 Al-Rajhi Bank comes at the forefront of Islamic banks in the Kingdom of Saudi Arabia, which began its banking and commercial activity more than fifty years ago 59 , and in 1407 H corresponding to 1987 G, the bank was transformed into a Saudi joint stock company.* On the 12th of Muharram 1427 H corresponding to the 11th of February 2006 G, the logo was changed, and the new brand of Al-Rajhi Bank was announced. The Bank started its activities with a capital of SAR 750 million, and on 31/03/2014 G, it reached SAR 16.25 billion ($4.3 billion). The Bank also manages assets worth SAR 288 billion Saudi riyals ($76.8 billion), and it has a wide network that includes 501 branches 60 by the end of December 2014. A financial report issued by “The Banker” magazine specialized in financial affairs indicates that Al-Rajhi Bank is one of the largest Islamic banks not only at the local and regional level, but at the global level 61 , as it is one of the largest banks listed in the Saudi market in terms of assets 62 . The following table shows the growth and development of the bank's assets during the period from 2009 to 2013. Table (2) The Growth of Al Rajhi Bank's Assets during 2009-2013 in millions Saudi Riyals 2009 2010 2011 2012 2013 Items 170729729 184840910 220731085 267382562 279870685 Total Assets 139286715 148311549 179115784 212484007 226386283 Net Finance & Investment 141988845 154523121 187242355 230913825 241466092 Total Liabilities 28740884 30317789 33488730 36468737 38404593 Total Equity 122861840 143064037 177732952 221394638 231589113 Customer deposits 6767228 6770829 7378268 7884706 7437987 Net profit 451 451 492 526 496 share profit Source: Al-Rajhi Bank's annual reports for the period 2007-2009 (Table prepared by the researcher) Based on the above table, it is noted that the bank achieved net profits in 2013 amounting to SAR 7438 million, compared to SAR 7885 million in 2012; i.e. a decrease of 5.6%, while the net financing and investment income amounted to SAR 9640 million, compared to SAR 9341 million in the fiscal year 2012; i.e. an increase of $. 3.3%. The shareholders’ equity increased to reach SAR 38 billion, compared to SAR 36 billion, with an increase of 5.3%. Total assets increased to SAR 280 billion, compared to SAR 267 billion in 2012, with an increase of 4.7%, 59 Encyclopedia of the Kingdom of Saudi Arabia, King Abdul Aziz Public Library, Chapter Nine: Economy and Natural Resources: Banks and Banking Institutions. Reports of Al-Rajahi Bank, and History of Al-Rajai Banking Company. * The bank was transformed into a Saudi joint stock company*, according to Royal Decree No. / 59 AD, issued on 3/11/1407 AH, and Al-Rajhi Banking Company was declared a Saudi joint stock company, pursuant to Ministerial Resolution No. 1398, dated 4/5/1409/ AH. (62) Al-Rajhi Bank, Annual Report of Al-Rajhi Bank, 2014. 60 SAMA – Monthly Statistical Bulletin pp. 42-41, December 2014. 61 “The Banker” magazine, November 2007 Issue, p. 4. The Banker Summary of the Top 1000 World Banks 62 Al-Rajhi Bank, Annual Report of Al-Rajhi Bank, 2014. 13 and customer balances amounted to SAR 232 billion, compared to 221 billion riyals; i.e. an increase of 4.6%. Al-Rajhi Bank is one of the most widespread Saudi banks at the local and international levels. It has the largest branch network among the banks operating in the Saudi market, with 501 branches, out of 1899 branches of Saudi banks at the end of 2014. The following figure shows the number of branches of Saudi banks at the end of 2014. Figure (4): Branches of Saudi banks in December 2014 The figure is adapted from the Argaam website on financial statistics, http://www.argaam.com At the corporate level, the Bank owns 7 companies, three of which operate inside KSA, and four operate outside it. The companies operating inside are: Al-Rajhi Takaful, specialized in insurance and owned by Al-Rajhi by 99%, Al-Rajhi Development Company Limited, headquartered in Riyadh, specialized in the real estates, and Al-Rajhi Administrative Services Company specialized in services. As for the companies operating outside KSA, they are in Malaysia, Kuwait and Jordan 63 . Bank Al-Jazira comes in second place in terms of incorporation and capital. The Bank was established as a Saudi joint stock company in the Kingdom of Saudi Arabia, and started its business on the 16th of Shawwal 1396 H, corresponding to the 9th of October 1976 G. After acquiring the branches of the National Bank of Pakistan in KSA in 1992, 64 the Bank began the process of restructuring with two successive increases in its capital in 1992 and 1994, which came exclusively from Saudi shareholders, and led to a significant reduction in the ownership of the National Bank of Pakistan. In 1998, the Bank’s board of directors decided to convert it from a traditional bank to a bank that all of its business complies with the provisions of Sharia in 2002. In 2007, all its operations and activities were completely in compliance with the provisions of Sharia, and its capital was increased to three billion Saudi riyals. 63 Al Rajhi Bank Annual Report 2013, p. 18. The companies are: Al Rajhi Banking and Investment Company Limited Malaysia, Al Rajhi Banking and Investment Company Kuwait, and Al Rajhi Banking and Investment Company Jordan. 64 Bank Al Jazira Annual Report 2014, pg.3. The Bank’s official website http://www.baj.com.sa/ar/ Al-Rajhi NCB Riyad Bank ANB Al-Bilad Saudi Fransi SABB Samba AlJazira AlInma Saudi Hollandi Investment Bank 14 The transition experiment of Bank Al-Jazira from traditional banking to Islamic banking is worthy of study, and it represents a qualitative leap, as all of the bank’s 17 branches were completely transformed to Islamic banking in 1998. This experience had a significant impact on the transformation of many traditional banks into Islamic banks, as it gave reassurance to the administrations of many banks operating in the Saudi banking market, and moved towards opening Islamic banking windows. 2009 is one of the most distinguished years for the bank, as it was the year of expansion and spread, when the number of branches increased to 48 branches covering new areas in the Kingdom. Bank AlJazira is also the first bank in the Kingdom of Saudi Arabia to launch a cooperative Takaful program in 2002 as an alternative to life insurance. The third Islamic bank in terms of incorporation and capital is AlBilad Bank, which was established as a Saudi joint stock company, in Riyadh on November 4, 2004 with a capital of 4 billion Saudi riyals, and its headquarters is in Riyadh. The Bank operates through AlBilad Real Estate Company Limited, which was established on 26/03/1427 H corresponding to 24/04/2006 G. The company is specialized in buying, selling, emptying and mortgaging real estate, redeeming, leasing, and keeping and managing the emptied assets in favor of the bank. In 2013, the number of the branches reached 102, with an increase of 14 branches over 2012. The bank also achieved good financial results as evident in the following table: Table (3) The financial results of Bank Al-Jazira during the period 2009-2013 in millions Saudi Riyals 2009 2010 2011 2012 2013 Items 1534 1611 951 1537 1667 Net Investments 11014 12290 13780 18256 23415 Net Finance 17411 21117 27727 29778 36323 Total Assets 13721 16932 23038 23742 29108 Customer Deposits 14409 18014 24311 25407 31222 Total Liabilities 3002 3103 3416 4371 5101 Equity Source: The Annual Report of the Saudi Al-Jazira Bank 2013 The fourth Islamic bank and the most recent one to be established is Al-Inma Bank, which was established as a Saudi public shareholding company to provide banking and investment services in compliance with Sharia provisions and controls on the 21st of Jumada I 1429 H, corresponding to 26th of May 2008 G with a capital of fifteen thousand million Saudi contributed by the following founders: The Public Investment Fund, the Public Pension Agency, and the General Organization for Social Insurance, whereby each founder was allocated 10% of the bank’s shares upon incorporation, and 70% was offered for public subscription during the month of Rabi’ II. The assets of the bank have grown significantly since its establishment, as shown in the following table: 15 Table (4): The financial results of the Al-Inma Bank during the period 2009-2013 in millions (SAR) 2009 2010 2011 2012 2013 Financial Position 1112 15593 25260 37187 44924 Net Finance 14846 8427 7431 10968 10372 Investments include bank balances 17306 26549 36784 54014 63001 Total Assets 1498 8316 17776 32214 42763 Customer Deposits 1701 11048 20889 37350 46169 Total Liabilities 15605 15501 15894 16664 16812 Shareholder's Equity Source: AlInma Bank Annual Report 2013 From the table, it is noted that the bank's assets grew at a rate of 17% compared to 2012, in addition to the growth of deposits at a rate of 33% in 2013. 3-1-2 Islamic Windows and Units in Traditional Banks in the Kingdom With the spread and growing awareness of Islamic banking services in the Kingdom, many departments of traditional banks in Saudi Arabia began to open Islamic windows or units, and the National Commercial Bank* is one of the leading banks that have shifted towards Islamic banking, as the idea of providing Islamic banking services in the National Commercial Bank dates back to the beginning the eighties through the following steps 65 : 1. A proposal examined by the bank to provide Islamic banking services, as a means of attracting for deposits, but it was not accepted due to the lack of clarity in completing the legal aspects of this work at the time. 2. An expert and practitioner of Islamic banking was resorted to design a set of contracts and documentary courses, but he was unable to put before the bank’s management a clear intellectual conception of how to implement them and the extent of the discipline of Islamic banking operations. 3. The Bank Administration suggested the idea of starting a single branch that offers Islamic transactions and all banks in Saudi Arabia participate in its capital, to be a * The National Commercial Bank is one of the oldest banks in the Kingdom of Saudi Arabia, and is the first Saudi bank in terms of incorporation. The bank started its activities under a Royal Decree on Rabi’ II 20, 1373 H, corresponding to December 26, 1953 G. In 1999, the Saudi government, represented by the Public Investment Fund of the Ministry of Finance, entered as a majority shareholder of the bank. Al-Ahly Bank owns 90.71% of the shares of Al-Ahly Financial Company, and Al-Ahly Bank owns 66.27% in Turkish Finance Katlim Bank, an Islamic bank. The total number of the bank’s branches in the Kingdom reached 329 branches at the end of the fiscal year 2013, providing Islamic banking services by the end of the year 2013. 65 Saeed Saad Al-Martan. Controls for the provision of Islamic banking services in Traditional Banks: “The Experience of the Saudi National Commercial Bank.” A paper presented to the symposium of the Supreme Consultative Committee working on the completion of the application of Islamic Sharia provisions, Economic Committee, State of Kuwait, May 17, 1999. 16 laboratory of experiments for all banks in the Kingdom. However, the idea was not favored by a number of banks. 4. In 1987, the first investment fund disciplined by Sharia Regulations was established, which is the “Global Trading Fund in Commodities”, which invested in commodity trading according to Murabaha sale modalities in international short-term transactions of excellent quality, except for gold, silver and currencies. This experience was a success, which motivated the bank's management to begin the experiment of shifting towards Islamic banking. 5. In 1990 the first branch specialized in Islamic banking services and products was established under the direction of the Bank's General Manager, who has been following up and monitoring the performance of this branch. 6. The Bank’s Administration was reassured about the branch’s experience, and decided to develop the work, and the National Center for Administrative Consultations was sought, as it is a Saudi House of Expertise specialized in providing banking and legal advice and training. 7. In 1992, the Bank’s Administration established an independent department for Islamic banking services to conduct Market research and field studies. Two studies were conducted: the first was directed at the individuals sector in 1995, and the second was directed at institutions, companies and businessmen in the main cities in 1996. The findings of the two studies were positive, and the financial results of the Islamic branches showed profit and success. In light of these findings, the Bank’s Administration began to qualify human resources, pay attention to training, carefully select the branches that will be transform, pay attention to the separation of capital, and legal, accounting and administrative controls. The Islamic banking departments in these branches also formed independent Sharia supervisory bodies to monitor the implementation. 66 The success achieved as a result of transforming many branches to Islamic banking was a motive and incentive to develop a plan to transform all the bank’s branches to Islamic banking. Indeed, the Bank’s Administration began implementing that plan, as the individuals department was transformed to Islamic banking, as the total number of branches providing Islamic banking services by the end of 2013 reached 329 branches 67 . There is also a plan in place to transform the bank’s other departments – companies and treasury – into Islamic banking. What confirms the Administration's tendency towards a complete shift towards Islamic banking is the statement issued by the bank’s Sharia Supervisory Board in response to the inquiries received by the Board regarding the permissibility of subscribing to the bank’s shares that were recently offered during the period from the 19th of October to the 2nd of November, 2014 68 *, 66 Ibid. 67 National Commercial Bank website http://www.alahli.com/ar-sa/about-us/corporate- 68 National Commercial Bank. Statement of the Sharia Supervisory Board of the National Commercial Bank regarding the legality of subscribing to the bank’s shares, p.1-5. * On Sunday, October 19, 2014, the subscription process for 500 million shares of the National Bank of Saudi Arabia began, amid widespread controversy over the legitimacy of the process, especially after the head of the Sharia Committee of the National Commercial Bank retracted his fatwa in support of the subscription, in light of the violating fatwa issued by the Grand Mufti of the Kingdom Which prohibited subscription and participation in banks, companies and institutions that deal in usury, in buying and selling. 17 which caused a wide controversy in the media regarding the permissibility and prohibition of subscribing to the bank’s shares 69 , the report of the Sharia Supervisory Board included the following points: 1. The bank’s assets at the end of June 2014 amounted to SAR 435 billion, of which 67% are Islamic assets, and 33% are traditional assets. Financing operations at the end of June 2014 amounted to SAR 206 billion. 2. 2- Islamic financing operations amounted to 140 billion riyals, in addition to them 20 billion riyals which are described as leasing operations, and thus Islamic financing operations become 78% of the total financing operations. 3. In terms of the number of bank branches, the National Bank ranks second, after Al- Rajhi Bank, as its branches reached 342 at the end of the fiscal year 2014, and all of these branches provide Islamic banking services. Samba Financial Group ranked third in transforming its branches to Islamic banking 70 , as the Group established the Islamic Banking Department in August 1996 G, corresponding to 1417 H, and it works independently from the other departments of the bank to ensure compliance with the provisions of Islamic Sharia. However, detailed information was not available to the researcher about the number of bank branches that were transformed to Islamic banking, and it was ranked third based on a written statement attributed to Dr. Muhammad Ali Al-Qari, a member of the Sharia Supervisory Board in Samba Financial Group. Riyad Bank ranked fourth place in terms of the number of Islamic branches, which amounted to 120, out of the total number of the bank’s 318 branches in KSA.* Upon the Bank’s Administration' desire to transform to Islamic banking, 80 of its branches were transformed simultaneously. A number of members of Sharia supervisory boards, including Sheikh Abdullah Al-Manea, described it as a “bold decision.” 71 Among the banks that witnessed a shift towards Islamic banking is the Saudi British Bank, where the Bank’s Administration adopted a strategic plan to develop Sharia-compliant businesses in all the bank’s divisions. In light of this, the number of Islamic banking branches reached (75) out of the total number of the bank’s 81 branches. 72 The shift in branches was accompanied by a shift in the corporate department towards Islamic banking, especially in the SME sector, in which the volume of Islamic banking profits became more than 65% of the total profits. 69 The controversy was presented in various media in Saudi Arabia, newspapers, television, and websites. 70 Muhammad Ali Al-Qari http://www.kantakji.com/economics * 75 branches of which are designed specifically to meet the banking needs of women, and 20 branches are for self-service. 71 Al-Manea's comment came in a speech he gave at a symposium on Islamic banks organized by Riyad Bank in the Hafr Al- Batin Governorate in the north-east of the Kingdom. It was reported by the Saudi newspaper "Al-Riyadh" in the Tuesday issue, May 6, 2008. 72 Adel Al-Nasser, Deputy Managing Director of “SABB Bank” in a symposium organized by the bank on the future and growth of Islamic banking, entitled “The Open Symposium for the Islamic Banking Industry,” Al-Riyadh newspaper, http://www.alriyadh.com/572081 Thursday, 20 Dhul Qi’dah 1431 H - October 28, 2010 G - Issue No. 15466 18 Table (5) Islamic Branches and Units in Traditional Banks in 2014 Ratio of Islamic branches to total branches Islamic Windows / Units No. of Branch es Bank %96.1 329 342 NCB Riyad Bank Saudi British samba group ANB Saudi Fransi Saudi Hollandi Saudi Investment 1 2 3 4 5 6 7 8 %37.7 120 318 %92.5 75 81 %041 3 72 %95.5 149 156 %14.6 12 82 %12.7 7 55 %16.9 10 48 %61.11 705 1154 Total Source: Prepared by the Researcher – Data collected from Saudi bank reports The aforementioned data show that Saudi banks have tended to switch to Islamic banking on a large scale, as the number of traditional branches that have been transformed to Islamic banking has reached 705 branches out of the total number of 1154 traditional bank branches, with a transformation rate of about 61.1%. Figure (5): Transformation Rate in Traditional Bank Branches 19 % 62 %38 Source: Prepared by the Researcher, based on the data in Table (5) 3-1-3-1 Challenges of Islamic Banks in the Kingdom The integrity of the banking system – both traditional and Islamic - in the Kingdom of Saudi Arabia falls within the jurisdiction of SAMA; therefore, it established a general department to monitor the financial sector 73 (banks, insurance companies, finance companies, exchange houses, and credit information companies). There is no doubt that the Agency played a great role in providing and creating an appropriate work environment for Islamic finance institutions; however, there are some aspects that need more attention, which were the reason behind the delay in the Kingdom's ranking in the Global Competitiveness Report on Islamic finance issued in 2013. In confirmation of what was mentioned in that report, a number of scholars and researchers in Islamic economics; e.g. Sheikh Abdullah bin Suleiman Al-Manea and others*, added other aspects related to the need for SAMA to support Islamic banks operating in the Saudi market on a number of levels, mainly: 1. The laws that regulate the relationship of Islamic banks with SAMA as the central bank are the same laws that were prepared for traditional banks, and in their current form they do not suit the nature of investment in Islamic banks, including laws related to the reserve ratio, liquidity and financing restrictions, etc. which require reconsidering these laws, and singling out Islamic banks with laws commensurate with their privacy and the nature of their work, as is the case in many countries in which Islamic financial institutions operate. 2. The absence of laws governing the transformation from a conventional bank to an Islamic bank, or even a partial transformation at the level of Islamic banking branches or units, so this transformation occurs in the absence of legal texts or explicit 73 The General Department of Banking Supervision is responsible for supervising and controlling the banking sector in the Kingdom of Saudi Arabia by virtue of Royal Decree No. M/5 dated 22/2/1386 H and Royal Decree No. 23 dated 23/5/1377 AH. * Among these scholars is Abdullah Al-Omrani, Professor of Sheikh Arshad Bin Dayel Chair for Endowment Studies at Imam Muhammad Ibn Saud Islamic University, Dr. Khaled Al-Muzaini, a faculty member in the Department of Islamic and Arabic Studies at King Fahd University of Petroleum and Minerals, Dr. Muhammad Ibarhim Al-Suhaibani, SABIC Chair for Islamic Financial Markets Studies http://www.alriyadh.com/10245 20 instructions that determine when and how the bank or branch becomes Islamic, and what are the procedures, terms, and controls for this transformation? Does the transformation take place simply by changing the bank’s articles of association, by obtaining a license, or by requesting a new license from the Ministry of Finance, or from SAMA – whatever the manner in which the licenses are granted 74 ? Noting that the laws dealt with other ways of regulating the transformation, such as transformation through banking merger and so on. 3. The absence of a supreme Sharia Supervisory Board in the Kingdom of Saudi Arabia affiliated to SAMA, that represents a unified reference for the Sharia Supervisory Boards of Islamic banks operating in the Saudi market, in light of their multiplicity and differing fatwas, reviewing and monitoring these fatwas, and attempting to narrow the jurisprudential differences in transactions, similar to the Supreme Sharia Supervisory Board of the banking system and the financial institutions in Sudan and Malaysia, for example. The importance of this suggestion lies in the fact that it makes SAMA a monitor over the activities of banks through the incorporation of a Sharia department in the Agency that is linked to the governor’s office. Contracts also shall be presented to the Supreme Sharia Board before they are circulated to banks 75 . In this context, the Agency shall monitor and follow up at the same time the extent of the commitment practiced by banks and financial institutions to the application of Islamic financing modalities. 4. Reputation risks and lack of trust in the legitimacy of Islamic banking products resulting from the multiplicity of jurisprudential opinions, and the different fatwas regarding the applications of Islamic banks in KSA, such as fictitious profit and Tawarruq, whose effects and mechanisms converge with usurious financing, which weakens the credibility of Islamic finance in Saudi Arabia and the Saudi society. 5. The Islamic banks in Saudi Arabia – like their counterparts in many other countries – lack the characteristic of the Last lender when they need liquidity; therefore, they may resort to hedging the risks of liquidity shortage by borrowing from their Islamic banks in the market, which may themselves face a liquidity problem, or perhaps resort to the formation of financial portfolios. There are successful experiences in a number of countries that can be followed in this regard; including the experience of Sudan and Yemen. 6. Lack of sufficient interest on the part of Islamic banking departments in addition to scientific research, especially research directed to the development of Islamic financial products. 2/3/1 Cooperative Insurance in the Kingdom of Saudi Arabia The insurance sector is one of the pillars of the financial services in the Kingdom of Saudi Arabia, and the emergence of the insurance market in the Kingdom dates back to before 1974 through agencies and branches of foreign companies, where the Red Sea Company, which is the first insurance company in the Kingdom, was established in 1974 76 , followed by the Star 74 Abdulaziz bin Sattam bin Abdulaziz Al Saud. Shariah Quality Policy in Islamic Banking, Sharia Policy Department, Higher Judicial Institute, Imam Muhammad bin Saud Islamic University, p.5 75 Sheikh Abdullah Al-Manea, Sama needs a Shariah committee to deal with bank disputes, Al-Iqtisadiah newspaper, Issue No. 7559, Sunday 24 Shaaban 1435 H. Corresponding to June 22, 2014. 76 Ahmed El-Sayed Abdel-Latif Hassan. Insurance, its economic, social role and challenges, Fakih Center for Research and Development, 1997, p. 7 21 Insurance Company in 1975, and the United Insurance Company in 1976 77 . In 1986, the National Cooperative Insurance Company was established, which name changed into the Cooperative Insurance Company, but the insurance activity was not legalized until July 2003, when the authorities in KSA issued the Cooperative Insurance Companies Control System by Royal Decree No. M/32, dated 02/06/1424 H; followed by the issuance of the Executive Regulations by the Minister of Finance's Resolution No. 1/596, dated 1/3/1425 H. the Cooperative Insurance Companies Control Regulation was assigned to SAMA 78 , and the regulations confirmed that the establishment of insurance companies should be similar to the provisions contained in the articles of association of the National Cooperative Insurance Company issued in respect of which the Royal Decree No. M/5 dated 17/4/1405 H, consistent with the Islamic Sharia. 79 Thirty five insurance companies are working in the Kingdom of Saudi Arabia (until the preparation of this research), in addition to 11 companies for inspection and loss assessment. ** The issuance of the Cooperative Insurance Companies Control Law was a motivation for the growth and development of the insurance sector. The sector has grown significantly during the past seven years, and witnessed the entry of 33 companies to the Saudi market in 2012 80 , and the insurance premiums subscribed in the same year amounted to 20.8 billion riyals; distributed among companies listed in the Saudi market. 81 The insurance sector’s revenues amounted to more than 20 billion Saudi riyals in 2012, according to SAMA Report No. (49). Also, the insurance premiums subscribed to in the first quarter of 2013 amounted to 6.9 billion riyals, with a growth rate of (20%) 82 ; with the health and vehicle insurance representing the largest percentage (43%) and (26%) respectively out of the total subscribed premiums 83 . The subscribed insurance premiums in the Saudi insurance market amounted to 30.48 billion riyals in 2014 compared to 25.24 billion riyals in 2013 and an increase of 20.8% compared to 19.2% in 2013. 77 Ibid p.7 78 SAMA. Cooperative Insurance Companies Control Law issued pursuant to Royal Decree No. M/32. Dated 02/06/1424 H, p.18 79 SAMA, Cooperative Insurance Companies Control Law Article one of the System issued by Royal Decree No. M/32/ Dated 02/06/1424 H, p.1 ** Loss assessment companies are Noble Inspection and Loss Assessment, Najm Insurance Services, McLarens Young Saudi Inspection and Loss Assessment, the Saudi Company for Inspection, Inspection and Loss Assessment, Cunningham Lindsey Saudi Arabia for Inspection and Loss Assessment, and Ahmed Omar Badhaidouh and Partners, Commercial Inspection and Loss Assessment Ltd., Crawford Saudi Inspection and Loss Assessment Ltd., Naseem Al-Moheet Inspection and Limited Inspections, Al Balour for Inspection and Loss Assessment Limited, and Sawalat Inspection and Loss Assessment Ltd 80 SAMA. SAMA Report No. 49, 1434 AH/2013 AD, p. 78 81 Ibid. p. 78 82 The Insurance Sector in the Saudi Stock Exchange - Albilad Investment Company, p. 2 and Tadawul, SAMA. 83 Ibid. 22 Table (6) Total Subscribed Insurance Premiums during the period 2009-2014 014 2013 2012 2011 2010 2009 Total % SAR Millions Total % SAR Millions Total % SAR Millions Total % SAR Millions Total % SAR Millions Total % SAR Milli ons Insurance Type %3 0.904 %3 0.845 %4 0.889 %5 0.905 %6 0.972 %7 1.003 Savings & Protection Insurance %52 15,720 %51 12.895 %53 11.285 %52 9.708 %53 8.690 %50 7.292 Health Insurance %45 13,857 %46 11.500 %43 9.000 %43 7.890 %41 6.725 %43 6.315 General Insurance %100 30,482 %100 25.239 %100 21.174 100% 18.504 %100 16.387 %100 14.61 Total Source: SAMA, General Administration for Supervision of Insurance Companies, Saudi Insurance Market Report 2014, p.6 According to a report issued by Boubyan Bank in 2011, the Kingdom of Saudi Arabia holds (80%) of the share of the GCC countries in the Takaful insurance market, followed by the United Arab Emirates with (13%), Qatar with (3%) and then Kuwait and Bahrain with (2%) each. According to the aforementioned report, GCC countries enjoy the lion’s share in the global Takaful insurance industry with (70%) of the total industry in the world, followed by Southeast Asia, with a share estimated at (21%), most of which is concentrated in Malaysia, then the remaining (9%) share is distributed among the rest of the world. As for the distribution of Takaful insurance over the regions, according to the report issued by Takaful (Global Insights) in 2013, Saudi Arabia accounted for (51%) of the insurance volume in the world. On the global level, Saudi Arabia and Malaysia are the two largest markets for Takaful insurance in the world. In 2013, according to the report issued by Global Takaful Insights, and according to the aforementioned report, the Kingdom of Saudi Arabia’s share reached (51%) 84 of the total Takaful insurance in 2012. Figure (6): Distribution of Takaful by Regions in 2012 Global Takaful Insights 2013 Ey P 20 :ردصلما 84 Global Takaful Insights 2013 Ey P 16 %1 %16 %25 %51 %2 %5 23 Despite the growth of the insurance sector and the development that occurred in it during the previous years, many challenges have emerged in the insurance market, and SAMA has made great efforts to legalize it and address many problems; mainly legal and regulatory, through the issuance of the Cooperative Insurance Companies Control Law and Executive Regulations; however, there are some aspects that still need improvement. The following aspects have contributed to limiting the Kingdom’s ability to attain advanced ranks in the competitiveness of the Takaful insurance sector at the regional and global levels: 1- The failure of many insurance companies to comply with the regulations and laws regulating insurance, due to the novelty of many of these companies and their lack of experience. This means that the burdens on the supervisory authorities increases to monitor these companies, and to ascertain their financial position, to ensure the fulfillment of their financial obligations and to monitor the extent of their commitment to implementing the laws and regulations regulating the insurance business. 2- Weak capital of insurance companies operating in the Saudi market and listed in the stock market, which reduces their chances of working and exposes them to large losses and accordingly their solvency decreases, insurance premium retention rates in their favor decreases, and becomes almost or total dependable on insurance brokers and international reinsurers in evaluating risks; consequently, reinsurance premiums shall rise. In order for Saudi insurance companies to be able to compete, they must increase their capital, or merge with other companies, although the merger process will face some difficulties, as many companies have incurred losses amounting to SAR 18 million during the first quarter of 2013. 3- The shortage of actuarial experts in the insurance market in the Kingdom. According to the reports issued by SAMA in this regard in 2014-2015, the Agency approved only two companies to provide actuarial services in the Kingdom: Nitaq Actuarial Services Co. and Manar Sigma Company for Insurance Consultancy and Actuarial services 85 . There is no doubt that the shortage of actuaries will negatively affect the insurance market in the Kingdom, and limiting the possibility of developing it. In light of this, a trend has emerged recently that calls for the teaching of actuarial sciences in the universities of the Kingdom, in addition to the formation of an association in the Kingdom for actuarial experts, which is a commendable trend that will help partially address this problem. 4- The insurance industry in the Saudi market suffers from a shortage of qualified national human resources, and a scarcity of trained competencies, as indicated by studies, reports and statistics issued by SAMA; which evidenced the weak rate of employment of Saudis working in insurance companies in the Saudi market, as it reached (%56.6) 86 of the total workforce in the insurance market in 2014, in addition to the weak percentage of Saudis in non-managerial positions, reaching (58.9%) in 2014 87 . These percentages do not commensurate with the rapid growth and great expansion witnessed by the insurance sector in the Kingdom as a result of the increasing demand for insurance service. The total number of employees in cooperative insurance companies in the Kingdom reached 9559 employees at the end of 2014. 5- The lack of academic departments teaching insurance studies in the universities of the Kingdom. According to the statistics published on the website of the Ministry of Higher 85 SAMA http://www.sama.gov.sa/ar-sa/Insurance/Pages/Licensed 86 SAMA Report No. 51, 1436 AH 2015-AD P.74 87 Ibid. 24 Education in the Kingdom, the number of universities in the Kingdom currently is 39 universities, of which 25 are public universities, and 8 private universities that grant bachelor’s degrees, and 6 private universities that grant master’s degrees in different specializations 88 . Despite the significant increase in the number of universities, and the multiplicity of academic departments, at the bachelor’s, the master’s and doctoral levels, and in various disciplines, the share of academic departments specialized in risk management and insurance in these universities is very little, and is limited to only two universities; namely in the College of Islamic Economics and Finance at the University of Umm Al- Qura in Makkah, and the College of Economics and Administrative Sciences at Imam Muhammad bin Saud Islamic University in Riyadh, and at the bachelor’s level only. Furthermore, there is a track in actuarial sciences in the College of Sciences at King Fahd University of Petroleum and Minerals 89 . In light of these statistics, there is a need to establish academic departments that offer programs at the undergraduate and graduate levels in insurance, to serve the Takaful insurance industry in KSA. 6- Lack of awareness of the importance of insurance in Saudi Arabia, as studies in this regard indicate that the per capita expenditure on insurance (insurance density) in the Kingdom is one of the lowest rates of individual expenditures on insurance in the world, reaching 816 riyals ($218) in 2013, which is less than the global average of 2460 riyals ($656) per capita in 2012 90 . Also, the penetration rate (depth) of insurance reached 0088% compared to the global average of 6.5%. However, there are positive indicators of a high insurance density that have appeared recently, according to the latest report issued by SAMA in 2015, from 846.5 riyals/person in 2013 to 990.7 riyals/ person in 2014; i.e. an increase of 14.6%. 91 7- Intense competition among the 35 companies operating in the Saudi market to obtain a larger share of the insurance market. In addition to the increase in health insurance claims and vehicles repairs claims; constituting about 78% of the total insurance business in the Kingdom, thus affecting the profits of insurance companies. 3/3/1 Sukuk in the Saudi market The actual beginnings of joint stock companies in the Kingdom of Saudi Arabia were in 1975, which witnessed the establishment of 14 joint stock companies 92 . The Capital Market Authority was established on 02/06/1424 H, corresponding to 31/7/2003 under the “Capital Market Law.” On March 19, 2007, the establishment of a Saudi joint stock company was approved under the name “The Saudi Stock Market Company (Tadawul)", with the aim of providing, creating and managing mechanisms for trading securities and carrying out settlement and clearing for securities. 88 The official website of the Saudi Ministry of Higher Education http://www.mohe.gov.sa/ar/studyinside/GovernmentUniversities/Pages/default.aspx 89 Fadl Abdel Karim Muhammad, an unpublished paper on the establishment of the Department of Risk Management and Insurance at the Institute of Islamic Economics at King Abdulaziz University in Jeddah, Safar 1436, p. 3 submitted to the Council of the Institute of Islamic Economics 90 Bank AlBilad. Bank Report, Insurance Sector in the Saudi Market, Albilad Capital 2013, p.1 91 SAMA. Report No. 51, 1436 AH 2015-AD p.74 92 The Saudi Stock Exchange Company (Tadawul) Articles of Association of the Saudi Stock Exchange (Tadawul). In 1988, the first appearance of bonds was recorded in KSA with the issuance of the Ministry of Finance for government development bonds. Tadawul provides a platform for companies that enable them to attract different investors with advanced systems that connect investors, traders and brokers. What enhances the strategic importance of the Saudi financial market and enhances its attractiveness is the position that the Kingdom enjoys as the largest economy in the region. 25 The company has developed an automated market for sukuk and bonds trading in the Kingdom, through licensed brokerage firms. Dealing with sukuk in the Saudi market is rather recent. The Saudi Basic Industries Corporation “SABIC” is the first entity to sign a pledge agreement to cover the subscription in the first public issuance of sukuk in the Saudi market with HSBC Saudi Arabian Banking Group Ltd. and the Group of Participating Managers, under the new regulation of the financial market, where it issued Ijarah Sukuk worth 3 billion Saudi riyals 93 . This was followed by Dar Al-Arkan Real Estate Development Company, which issued international sukuks worth $425 million in 2007 94 , followed by sukuk issuances in the Saudi market 95 *. This was evident in the diversity and size of issues. The establishment of this market was a motive for issuing more sukuk and increasing its volume. SAMA report No. (51) indicates that the volume of Islamic sukuk and bonds has expanded significantly, as they amounted to 32.5 billion Saudi riyals in 2014, since the establishment of the stock market until the end of 2014, with eight issuances: two issues for the Saudi Basic Industries Corporation (SABIC) with an issue size of 13 billion Saudi riyals; three issues for the Saudi Electricity Company 96 with an issue size of SAR 19 billion, and an issue for the Saudi Hollandi Bank with an issue size of SAR 725 million, in addition to an issue by Sipchem of about SAR 1.8 billion, and Satrop Company with an issuance volume of SAR 3.7 billion. In addition, Dar Al-Arkan Real Estate Development Company issued international sukuks (worth $425 million) 97 . The trading volume of sukuk and bonds amounted to SAR 108.1 million during 2014, while the nominal value traded for these sukuk and bonds amounted to SAR 107.6 million 98 . Recent reports indicate that 8 companies listed on the Saudi market issued sukuk in 2014 with a total value of 19.6 billion riyals, equivalent to $5.2 billion, 48% of which was for the Saudi Electricity Company.** Dar Al-Arkan announced in May 2014 the closure of sukuk issuance within the framework of the Islamic Sukuk program in US dollars, the company received 1.5 billion Saudi riyals, equivalent to 400 million US dollars. In June, the Saudi Telecom Company (STC) closed its issuance of sukuk worth 2 billion riyals, as part of a program that it announced in May 2014. The following figure shows the volume of Sukuk issued by companies listed on the stock market in 2014. 93 Saudi Basic Industries Corporation, SABIC official website http://www.sabic.com/corporate) 94 (Dar Al-Arkan Real Estate Development Company, the official website of the company http://www.alarkan.com/Default.asp * In 1988, the first appearance of bonds in the Kingdom was recorded with the issuance of the Ministry of Finance for government development bonds 95 http://www.tadawul.com.sa/wps/portal/!ut/p/c0/04 ** Last April, the Saudi Electricity Company completed the issuance of dollar-denominated sukuk amounting to 2.5 billion dollars. Thirty years with a return of 5.5% and the return will be paid on each segment every six months. 96 SAMA Report No. 51, 1436 AH, p. 96 97 The official website of Dar Al-Arkan Real Estate Development Company http://www.alarkan.com/Default.aspx?lang=ar 98 SAMA Report No. 51, 1436 AH, p. 95 26 %5 %9 Other 8% %62 Figure (6) Amount of Islamic Sukuk issued by companies listed on the stock market in 2014 Nominal Traded value (thousand riyals) Traded value (thousand riyals) Executed Transacti ons Annual Return (%) Expiry date Nominal Value (Thousan d Riyals) Issuance size (Million Riyals) Sukuk / Bond 0 0.0 0 SAIBOR for 3 months %1.65+ 26 Dec.2015 100 240 Saudi ORIX Sukuk 1000 997.5 1 SAIBOR +190 Profit Ratio (Basis Points) 31 Dec.2019 100 725 Dutch Sukuk2 0 0.0 0 SAIBOR for 6 months 95%+ 15 Dec.2028 50 7500 Sadara Sukuk 48000 48410.4 3 SAIBOR %1.75+ 6 July 2016 100 1800 Sipchem Sukuk 0 0.0 0 SAIBOR %95.+ 6 July 2029 100 7000 Saudi Electricity *2 33530 33530.0 3 SAIBOR for 3 months 0.7%+ 10 May 2030 10 7000 Saudi Electricity 3 25000 25025.0 1 Cybor for 6 Months +0.95+Profit ratio 190 (Basis Points) 30 Jan. 2024 1000 4500 Saudi Electricity 4 100 100.1 1 20 Dec.2025 100 3749 SATORP Sukuk 10763 0 108063. 0 9 - - 32514 Total *Deposit canceled on 7/7/2014 Source: The annual report of SAMA No. 51 for the year 2014, p. 96 As for the global level, the Kingdom of Saudi Arabia is one of the largest contributors to the sukuk market, and ranked second in the world after Malaysia 99 . The Malaysian market share of the total sukuk issued in the second quarter of 2013 amounted to $18.4 billion, while the Saudi market share of these sukuks amounted to $5.4 billion 100 in the same year. The following figure shows the share of each of the 4 largest sukuk issuers in the world. Figure (7) Distribution of Sukuk by Country for the year 2013 Source: Global Takaful Insights 2013, P.16 99 (99) Thomson Reuters Foundation report, Ibid. 100 Ibid. 27 1/3/3/1 The challenges and difficulties facing the sukuk market in Saudi Arabia The experience of issuing sukuk in the Kingdom is somewhat recent, so it needs some time to be assessed. Based on the presented data, it can be said that the sukuk market in Saudi Arabia is in its early stages, and it shall take a long time to be able to compete. The Kingdom's second rank in the sukuk market worldwide does not mean that there is development and interest in this market, to the extent that enabled it to attain this rank; however, there may be a different interpretation of this result, as it came in light of the lack of knowledge of the nature and the reality of sukuk and its role in financing in many countries. The observer of the sukuk market in the Kingdom notes that its issuances are weak compared to the issuances of other countries, which are considered the least contribution of the Kingdom to the Islamic financial industry such as Malaysia. The latest reports indicate that the Kingdom’s issuance of sukuk in 2013 did not exceed 21.8% of the total sukuk issuances worldwide, compared to about 63% for Malaysia during the same year. 101 The sukuk infrastructure also needs to be improved, according to a report prepared by Thomson Reuters on the most active countries in the global sukuk market during the period 2009-2012, 102 where the volume of sukuk issued in the Kingdom in that period was $19,395 million, while Malaysia’s share amounted to $201357 million. In light of these numbers, many challenges arise in this emerging market, which can be summarized in the following points: 1. Lack of qualified human cadres working in the sukuk market; as issuing sukuk requires deep knowledge of a number of legal, accounting, and jurisprudential aspects, given the complexity of sukuk structure. In addition, the lack of human cadres entails a shortage in the number of brokerage institutions and brokers in the sukuk market, in addition to the lack of awareness among Saudi investors of the functions and benefits of sukuk. 103 2. The small number of companies operating in the sukuk market, and through previous monitoring, there are only 8 companies working in this field, with volume of issuances that do not exceed 32514 million riyals. 3. Some Islamic sukuk include Sharia violations as a result of the non-compliance of their issuers with Sharia standards, which calls for the need to adopt unified standards to determine the value of the sukuk, in addition to the need for greater transparency in the market, and the issuance of financial classifications, especially since there are great opportunities in the Kingdom that can be financed through sukuk. ** 4. The differing attitude of Islamic banks in Saudi Arabia regarding sukuk. Some jurists believe that it is incompatible with Sharia, and among them is Sheikh Suleiman Al- Manea, *** who believes that working with sukuk is valid if certain procedures are 101 Global Takaful Insights2012, P. 16 102 Thomson Reuters ZawyaSukuk Perceptions and Forecast P 13. 103 Abdul Karim Ahmed Kunduz. An analysis of the obstacles of sukuk in the Kingdom of Saudi Arabia and ways to activate it: a comparative study of the sukuk market in the Kingdom, the sukuk market in the GCC countries, and the Malaysian sukuk market, a paper presented to the first conference of business schools in the universities of the GCC countries, King Saud University, during the period 16-17/4/1435 H corresponding to17-16/ 2/2014 G p.14 ** Like the Saudi-Gulf Infrastructure Pipeline, which is a huge investment opportunity with a value of more than two trillion US dollars 28 abandoned such as allocating to its Manager more than a certain percentage in the net profit, which is the right of the capital owners, unless within a reasonable framework. 5. Some sukuk types cannot be traded after their issuance except with specific controls that limit the opportunities for flexible trading in the market, and many of the sukuk issuances target a specific category; namely companies and institutions, not individuals, due to the high price of the single unit. In light of these statistics, the importance of developing the sukuk market emerges as one of the most important financing tools, and the responsibility for its development lies with the Capital Market Authority and the relevant authorities by taking the following steps: 1. Developing the market in terms of issuance and trading, facilitating the offering procedures, and overcoming the organizational and structural difficulties that hinder the issuance of Sukuk, in order to make the Saudi stock market an attractive market for exporters. 2. Reviewing the procedures and requirements for offering sukuk with the aim of adopting a different review methodology, and different offering requirements based on several considerations; namely, the issuer’s previous experiences, the issuer’s credit rating, the target investor categories, and the level of complexity in structuring the offered sukuk. 3. Spreading awareness and knowledge among those working in the sukuk market – individuals or companies – of the applied audit methodologies, the applicable offering requirements, and the considerations on which they are based, in order to ensure a correct understanding of the procedures and regulatory requirements for the offering, and to avoid their reluctance from the financial market as a source of financing due to incorrect pre-assumptions. 4. Supporting the capabilities of the Capital Market Authority in dealing with the issuance of sukuk requests, and assisting it in possessing sufficient and qualified human resources through continuous training and benefiting from the experts and specialists in transferring knowledge, and familiarizing the competent specialists at the Authority with the latest developments and best practices. 4/3/1 Islamic Investment Funds in the Saudi market The Kingdom of Saudi Arabia is one of the first Arab countries to issue investment funds*, as the National Commercial Bank established the first investment fund in the name of the Al-Ahly Short-Term Dollar Fund in December 1979 104 , after which the rules for regulating investment funds were issued in the Kingdom at the beginning of 1993. Based on the success of this experiment, Saudi banks issued many diversified investment funds. With regard to Islamic investment funds, the National Commercial Bank was the first bank to issue an investment fund that operates in accordance with the provisions of Islamic law, the Al-Ahly Fund for Trading in Global Commodities according to the Murabaha sale modality in * The first investment fund was established in Kuwait in 1985, then the rest of the Arab countries followed. In Egypt, Capital Market Law No. 95 issued in 1992 authorized the establishment of investment funds, and the first fund was established in Egypt by the National Bank of Egypt in 1994. It was followed by Morocco in 1995, Lebanon in 1966, and Jordan in 1997. 104 Capital Market Authority. Investment Funds, Kingdom of Saudi Arabia, p.2 29 1987 105 . This experience prompted the issuance of the rules and regulation of Saudi investment funds at the beginning of 1993. After the issuance of the laws regulating the work of investment funds, the banks continued to issue many diversified funds from traditional banks 106 ; however, the attention has shifted to Islamic funds largely. Investment companies in the Kingdom of Saudi Arabia managed 240 investment funds during 2012, with a total amount of SAR 88.1 billion. According to SAMA Agency Report issued in 2012 107 , the assets of local investment funds amounted to SAR 69.8 billion, while the assets of global investment funds amounted to SAR 18.3 billion 108 . The assets of investment funds include local assets and foreign assets. The following table shows the development of investment funds in KSA during the period 2005-2012. Table (7): Development of investment funds in KSA during 2005-2012 2012 2011 2010 2009 2008 2007 2006 2005 240 249 243 244 262 252 214 199 No. of Funds 9- 6+ 1- 18- 10+ 38+ 15+ - Change Source: http://www.argaam.com/article/articledetail 109 At the global level, the Kingdom of Saudi Arabia is the second largest center for Islamic investment funds in the world, as it hosts 163 funds 110 out of 786 total global funds in 2012. The following figure shows the geographical distribution the Islamic investment funds Assets, and shows the huge contribution of the Kingdom of Saudi Arabia in these funds, as it ranked second worldwide after Malaysia. Figure (8): Geographical Distribution of the assets of Islamic investment funds around the world in 2012. 105 Mustafa Ibrahim Muhammad Mustafa, Assessment of the transformation phenomenon of traditional banks to Islamic banking, an applied study on the experience of some Saudi banks, a Master’s thesis submitted to the American Open University 2006, p. 55 106 Capital Market Authority. Investment Funds, Kingdom of Saudi Arabia, p.2 (110) Lipper Research Report, Thomson Reuters, 2012. 107 Report No. 49 SAMA 2012, p. 97 108 Ibid, p. 98 109 http://www.argaam.com/article/articledetail/4611614. 110 Lipper Research Report, Thomson Reuters, 2012 30 1/4/3/1 Challenges and obstacles facing the work of Islamic investment funds in the Saudi Market Despite the diversity of investment funds currently offered and their great potential, they are still in early stages compared to the funds issued in Malaysia. The investment funds in KSA have a number of challenges, like global investment funds. The report of Islamic investment funds issued at the end of 2011 indicated three priorities that should be focused on in the Islamic fund market, at the present time 111 . There is no doubt that Saudi investment funds are concerned with the following priorities like other global Islamic investment funds, which are: 1. The emergence and restructuring of funds, as fund managers face obstacles represented in the lack of availability of high-quality assets that are compatible with Islamic sharia, and the scarcity of investment products, while the improvement in investor confidence levels will have positive effects on the performance of large and well-known companies operating in the investment fund sector. 2. Attracting the interest of institutions and clients to pump capital into the funds. The main weakness in the structuring of Islamic markets – in all regions except Malaysia – is the excessive reliance on some institutional funds, which made up two-thirds of the total new funds launched in 2010. 3. Increasing the operational efficiency of investment funds, as reducing fees by 30% over the past years, forces the funds to reconsider their strategies related to revenues and costs, the operating model, and most importantly, the infrastructure necessary to manage risks, in order to be able to achieve sustainable growth 112 . In light of these statistics, the importance of developing the Islamic investment fund market is highlighted by taking into account the following points 113 : 1- Diversification of distribution channels for investment funds: The fact that the distribution of investment funds depends on selling directly through the fund manager limits the spread of these funds and their access to the largest possible number of investors due to the high marketing costs. On the other hand, the diversity and multiplicity of distribution channels contribute to increasing fair competition between fund managers and enabling them to reach a larger audience of investors, the availability of various investment products and sufficient information about them, allowing the investor to make comparisons, and taking into account organizing and supporting the distribution of investment funds by encouraging the establishment of electronic distribution platforms, and allowing unauthorized persons to distribute. 2- Developing the regulations related to the legal entity of investment funds: It is necessary to improve the regulatory environment for these funds, and to provide a flexible regulatory framework that responds to the needs market customers in line with international best practices, and increases the level of protection for clients’ funds, by developing legislation that allows the establishment of investment funds as a legal entity independent of the fund manager and its custodian, other than the current legal regulations of contractual agreements between the fund manager and its investors. 111 The Fifth Annual Report of Islamic Investment Funds 2011, Islamic Financial Services Group in Ernst & Young Middle East and North Africa, World Conference on Islamic Investment Funds and Financial Markets. Al-Iqtisadiah newspaper, Sunday 4/11/1432 H corresponding to 02/10/2011 G. Issue No. 6565. 112 Asharq Al-Awsat Newspaper. Issue 11998, Tuesday 4 October 2011. 113 The website of the Capital Market Authority http://www.cma.org.sa/Ar/Pages/Investment_Funds.aspx 31 3- Requiring the independence of the investment fund custodian: It is necessary to review the functions and work of the custodian services for investment funds and setting the necessary regulatory requirements to achieve the independence of the custodian services from management, in line with international best practices, and for the development of the mechanism of work of the investment funds. This leads to increasing the level of protection for the funds' assets and information, applying a better governance framework to the funds, and increasing their attractiveness to investors. 2- Islamic Finance in the Kingdom: Opportunities and Challenges The study of Islamic finance in the Saudi market in its four components revealed the magnitude of this finance, and the large contribution of the Kingdom of Saudi Arabia to its assets. There are a number of opportunities for the Islamic finance industry that, if employed properly, may improve the ranking of KSA in the Competitiveness Report on Islamic Finance in the near future. There are also some challenges facing this industry, once overcome, KSA would assume a prominent position in all Islamic finance sectors, and achieve advanced ranks among the countries involved in the Islamic financial services industry. In fact, there are multiple opportunities for Islamic finance in the Kingdom, and to the same extent, there are many challenges facing it. This paper focuses on the most prominent opportunities and challenges. 2/1 Opportunities 2/1/1 The Kingdom of Saudi Arabia possesses great economic potentials, which makes it in a good competitive position in the Islamic finance industry, as its economy is one of the top 20 economies worldwide, and this economy is going through an unprecedented boom period, based on a developed and diversified economic base, which includes various sectors of the economy, thus preparing the banking and financial services market for high levels of growth, with great opportunities for Islamic banks and financial institutions to expand their services. Reflecting the developments that have occurred in the Saudi economy, Moody's International Credit Rating Agency has kept the Kingdom's sovereign rating high (Aa3) with a stable outlook. After a similar announcement by Fitch International Credit Rating Agency, confirming the Kingdom’s sovereign rating at a high credit rating (AA) with a stable outlook. 114 There is no doubt that the strength of the economy has a positive impact on the Islamic financial services industry. 2/1/2 The Kingdom of Saudi Arabia is the largest free economic market in the Middle East. It possesses 25% of the total Arab national product, in addition to having the largest oil reserves in the world (25%). It also has a wide group of natural resources in the field of non-mining. Furthermore, its geographical location made it a commercial transit point between the East and the West, and an easy gateway to the markets of Europe, Asia and Africa 115 , which made it the gateway to the global economy and a gateway to regional markets. According to the 2014 World Economic Forum Report, the Kingdom ranked the 24th out of 144 countries in 2014, and was distinguished in the macroeconomic axis, as it ranked fourth globally, twenty-first in market size, and twenty-fifth in the institutions index 116 . 114 SAMA, a press release on the Moody’s announcement of ranking the Kingdom’s credit rating at (Aa3) with a stable outlook http://www.sama.gov.sa/ar-sa/News/Pages/News01042015. aspx 115 Ministry of Economy and Planning, Investment in Saudi Arabia Why? p1 D1E7DF3.beta?event=SwitchLanguag 116 The General Investment Authority The Authority's official website http://www.sagia.gov.sa/ar/ 32 Investors in the Kingdom can take advantage of the financing opportunities offered by the Saudi banking sector, both Islamic and traditional. In addition, the Kingdom's distinguished geographical location makes its market a secure place for international financial institutions to access this market, which increases the element of competition that motivates Islamic financial institutions to provide the best services. According to the World Economic Forum Report 2014, the Kingdom ranked twenty-fourth out of 144 countries in 2014 and was distinguished in the macroeconomic axis, as it ranked fourth globally, twenty-first in market size, and twenty-fifth in the institutions index 117 . Investors in the Kingdom can take advantage of the financing opportunities offered by the Saudi banking sector, both Islamic and traditional. In addition, the Kingdom's distinguished geographical location makes its market a secure place for international financial institutions to access this market, which increases the element of competition that motivates Islamic financial institutions to provide the best services. 2/1/3 The Kingdom's geographical location made it a commercial transit point between the East and the West, and an easy gateway to the markets of Europe, Asia and Africa, which made it the gateway to the global economy and a gateway to regional markets. Its distinguished geographical location makes its market a secure place for international financial institutions to access this market, which increases the element of competition that motivates Islamic financial institutions to provide the best services 2/1/4 The 2030 vision and the financial development program remain a milestone in managing the economic systems and changing it for the better in light of the great desire of the Kingdom to bring about positive change in all aspects of life in a way that serves the financial sector and positively affects people's lives. The Kingdom of Saudi Arabia ranked second after Singapore in the Competitiveness Report with regard to the indicator of the ability of government policies to adapt to changes, which may be reflected in any changes that occur in the financial sector in general. Islamic finance, in particular, should undergo some transformation, whether in its structure, policies and investment tools, with a degree of flexibility. 2/1/5 The stability of the financial markets in the Kingdom will help the growth of the banking and financial sector in light of the great interest that the Ministry of Finance pays to the financial markets. This stability will be an incentive for foreign investments to enter the Saudi market. As a result of this effort, the Kingdom of Saudi Arabia ranked 7th on the Financial Stability Index, and ranked 17th in the size of financial markets. This is also reflected on the performance of Islamic financial institutions under the supervision of SAMA, which established a fund to protect deposits in 2015, which covers any problems that may cause instability. 2/1/6 There are a number of institutions in the Kingdom that support the Islamic financial industry, including: the Islamic Development Bank and the King Abdullah Financial District, the Islamic Chamber of Commerce, Industry and Agriculture, and the Saudi Stock Exchange. These institutions constitute powerful support for the Islamic financial industry. 2/1/7 Saudi Arabia hosts colleges, institutes and research centers that support Islamic finance, including the Institute of Islamic Economics at King Abdulaziz University (formerly the Islamic Economics Research Center), the College of Islamic Economics and Finance at Umm Al-Qura University (formerly the Department of Islamic Economics) and the College of 117 Department of Statistics. Statistical Report, Kingdom of Saudi Arabia for the year 2012 33 Economics And Islamic Finance at Al-Imam Muhammad Ibn Saud Islamic University in Riyadh (formerly the Department of Islamic Economics), the Islamic Research and Training Institute, a member of the Islamic Development Bank Group, in addition to many research centers and academic chairs that have made supporting Islamic finance a goal; e.g. the Research Excellence Center for Islamic Banking and Finance Studies. These academic institutions and departments will contribute to supporting the Islamic financial services industry through the educational and training programs they provide, in addition to supporting this industry with solid research and field studies that contribute to rooting the experience of Islamic banking in Saudi Arabia. 2/1/8 The Kingdom of Saudi Arabia hosts two jurisprudence councils that support the Islamic financial services industry in a large way, namely: the International Islamic Fiqh Academy emanating from the Organization of the Islamic Conference in Jeddah, and the Islamic Fiqh Council of the Muslim World League in Mecca. In addition to these two councils, there are a large number of scholars in Saudi Arabia who specialize in contemporary financial transactions, and a large number of qualified researchers in the field of Islamic economics. According to the study prepared by the General Council of Islamic Banks and Financial Institutions on Shariah Boards in Islamic Financial Institutions in cooperation with BDO Financial Consulting Jordan, KSA has obtained the largest percentage of Sharia scholars working in Shariah supervisory boards, not at the level of the Kingdom, but worldwide. All these factors and others make Saudi Arabia an attractive environment for Islamic finance. The presence of these scholars greatly contributes to the work of the Sharia supervisory boards, and also contributes to the rooting of the products of Islamic banks. 2/1/9 The Islamic banks in the Kingdom of Saudi Arabia rely on a broad base of customers who prefer Islamic products over traditional banks products, based on the prohibition of dealing with these products, and they prefer to deal with Islamic banks despite the high cost of their products, as indicated by some studies in this regard. This contributes to the formation of a broad base of customers; consequently, these banks can provide the largest amount of financing, which portends higher profitability. 2/1/10 The Kingdom enjoys a stable economic situation, and is ranked third in the world in terms of economic stability, and the investment environment in the Kingdom is an attractive environment for local and foreign projects. In addition, the Kingdom's open markets create a "competitive advantage" over the diverse and huge Saudi markets and projects, and this will be reflected on the performance of the financial and banking sectors in terms of providing the required finance for these projects. 2/1/11 The increasing demand for banking products, given the demographic characteristics in the Kingdom, as the statistics issued by the Department of Statistics for the year 2013 show that the population of the Kingdom of Saudi Arabia has reached 30 million people, of whom Saudis represent about (68%) of the country’s population with a number of 20.3 million, compared to 9.7 million non-Saudis, representing nearly a third of the population 118 . According to estimates for the year 2013 published in the annual report of SAMA, the number of Saudi males reached 10.2 million, representing (34%) of the total population of the Kingdom 119 . 118 The annual report of SAMA No. 49, 1434 H, 2013 G * The quality of the assets of the banking and financial services sector improved, and the percentage of non-performing loans decreased from 3.4% in 2009 to 1.9%, which is lower than the average for the Arab Gulf countries, which amount to 5%. 119 Ibid. 34 The largest segment of the population in the Kingdom is the youth category between (15 – 45) years old, which represents 42% of the total Saudis, and it is an ever-increasing percentage. Those reports indicated an increase in the number of young people wishing to enter the labor market; i.e. an increase in the demand for banking services. 1/2/12 The rise in the average per capita income in Saudi Arabia, and the increased focus on Islamic Sharia-compliant products, especially in light of the growth of the banking and financial services sector during the past decade, whereby total assets increased threefold, from 508 billion Saudi riyals to 1734 billion Saudi riyals*. The rise in income levels will affect the well-being of individuals, which makes dealing with financial institutions in the Kingdom, both Islamic and traditional, one of the important requirements, and a large segment of Saudi society seeks financing, whether productive or consumptive. 2/1/13 Saudi Arabia encompass a group of banks that have large assets that are compatible with Islamic Sharia. The assets of Islamic banks in the Kingdom represented about 42.9% of the total assets of Islamic banks worldwide, and Al Rajhi Bank ranked second at the global level, in terms of Islamic assets. In 2009, with assets of $43.9 billion, the National Commercial Bank ranked twelfth with assets of $16.135 billion. The Banker Magazine Bulletin 120 confirmed that six Saudi banks are among the top 25 banking institutions around the world that deal in Islamic assets 121 and the three largest banks in the Arab world are Saudi banks 122 . 2/1/14 There are a number of institutions in the Kingdom that support the Islamic financial industry, including: the Islamic Development Bank and the King Abdullah Financial District. The Islamic Chamber of Commerce, Industry and Agriculture, and the Saudi Stock Exchange, and these institutions constitute powerful tools for the Islamic financial industry. 1/25/15 Saudi Arabia hosts colleges, institutes and research centers that support Islamic finance, including the Institute of Islamic Economics at King Abdulaziz University (formerly the Islamic Economics Research Center)**, the College of Islamic Economics and Finance at Umm Al-Qura University (formerly Department of Islamic Economics) and the College of Islamic Economics and Finance at Umm Al-Qura University. Islamic Economic and Financial Sciences at Al- Imam Muhammad Ibn Saud Islamic University in Riyadh (formerly Department of Islamic Economics) 123 , and the Islamic Research and Training Institute, member of the Islamic Development Bank Group 124 . In addition to many research centers and academic chairs that made supporting Islamic finance a goal, such as the SABIC Chair for Islamic Financial Markets Studies, Sheikh Muhammad Al- Rashed Chair to Islamic banking studies, etc. These scientific institutions and chairs will 120 “The Banker” magazine, November 2007 issue, p. 4,Ibid. 121 Report of the Ministry of Economy and Planning, Investment in Saudi Arabia Why? Ministry website http://www.mep.gov.sa/themes/ ** Then the establishment of the Center was followed by the establishment of the Islamic Economics Division in the Department of Higher Sharia Studies at the College of Sharia and Islamic Studies when it was a branch of King Abdulaziz University in Makkah Al Mukarramah in 1398 H corresponding to 1977 G, and after the kind approval was issued for the establishment of Umm Al Qura University in Makkah Al Mukarramah on 22/6/1401 H .The Department of Islamic Economics was established in 1402/1401 H, Which was transferred to the College of Islamic Economics and Finance in 1433 H. 122 University website http://units.imamu.edu.sa/colleges/Economics/profile/Pages/default.aspx 123 An introduction to the institute within the publications of the Islamic Research and Training Institute, the Islamic Research and Training Bank * A Royal Decree was issued on 13/04/1432 H to establish a jurisprudence council called the Saudi Fiqh Academy to be an Academic forum in which jurisprudential issues are discussed, under the supervision of the Council of Senior Scholars. 124 Ahmed Mahdi Balwafi. Islamic Finance Programs in Higher Education Institutions in the Gulf Cooperation Council Countries: A Comparative Analytical Study, Paper Presented to the Ninth International Conference on Islamic Economics and Finance (ICIEF9) “Growth, Justice, and Stability: An Islamic Perspective”, Istanbul 10 -09 September 2013, p. 7 35 contribute to supporting the Islamic financial services industry through the educational and training programs it provides, in addition to supporting this industry with solid research and field studies that contribute to rooting the work experience of the Islamic banking in Saudi Arabia. 2/1/15 The Kingdom of Saudi Arabia hosts two jurisprudence councils that support the Islamic financial services industry in a large way, namely: the International Islamic Fiqh Academy emanating from the Organization of the Islamic Conference in Jeddah, and the Islamic Fiqh Council of the Muslim World League in Mecca *. In addition to these two councils, there are a large number of scholars in Saudi Arabia who specialize in contemporary financial transactions, and a large number of qualified researchers in the field of Islamic economics. According to the study prepared by the General Council of Islamic Banks and Financial Institutions on Shariah Boards in Islamic Financial Institutions in cooperation with BDO Financial Consulting Jordan, KSA has obtained the largest percentage of Sharia scholars working in Shariah supervisory boards, not at the level of the Kingdom, but worldwide. 2/2 Challenges Facing Islamic Finance in Saudi Arabia The integrity of the banking system – both traditional and Islamic – in the Kingdom of Saudi Arabia is one of the tasks of SAMA; consequently, it established a public administration to monitor the financial sector (banks, insurance companies, finance companies, exchange institutions). There is no doubt that the Agency played a major role in providing and creating an appropriate work environment for Islamic finance institutions, but there are some aspects that need more attention, and some of them were referred to by Sheikh Abdullah bin Suleiman Al- Manea, a member of the Sharia Supervisory Boards in many banks in the Kingdom, along with a group of other researchers and jurists. Among these aspects are the following: 2/2/1 The laws regulating the relationship of Islamic banks with SAMA – as the central bank – are the same laws that were prepared for traditional banks, and in their current form they do not fit the nature of investment in Islamic banks, including the laws related to the reserve ratio, liquidity and financing restriction, etc… which requires a review, and assigning Islamic banks with laws that commensurate with their uniqueness and the nature of their work, as is the case in many countries in which Islamic financial institutions operate. 2/2/2 The absence of laws governing the transformation from a traditional bank to an Islamic bank, or even a partial transformation at the level of Islamic banking branches or units, so this transformation occurs in the absence of legal texts or explicit instructions that determine when and how the bank or branch becomes Islamic, and what are the procedures, conditions, and controls for this transformation? And is the transformation done by simply changing the bank’s Articles of Association, or by a license, or by requesting a new license from the Ministry of Finance, or from SAMA; noting that the laws dealt with regulating other methods of transformation, such as transformation through banking merger for example. 7- The absence of a supreme Sharia supervisory board in KSA affiliated to SAMA that can represent a unified reference for the Sharia supervisory boards of Islamic banks operating in the Saudi market, given their multitude and differing fatwas. Such entity may serve to review and monitor these fatwas, and work to narrow the jurisprudential differences in the financial transactions of Islamic banks, and play a role similar to the Supreme Sharia Supervisory Boards of the Banking System and Financial Institutions in Sudan and Malaysia. The importance of this lies in the fact that it enables SAMA to monitor the activities of Islamic banks through the establishment of a Sharia department 36 inside SAMA that reports to the governor’s office, and presents contracts to the Supreme Sharia Board before they are circulated to banks. At the same time, it monitors banks and financial institutions’ degree of compliance to Islamic financing modalities. 8- The different fatwas of the Sharia supervisory boards in the Islamic banks in the Kingdom, as there are some controversial matters. The movement of transactions in the markets is many and varied, and its particles and details differ, and it is difficult to get people to have one opinion about them. Therefore, we may find a clear discrepancy in the fatwas issued by the Sharia supervisory boards in the Kingdom of Saudi Arabia, but an apparent difference in one jurisprudential issue. One body may issue a fatwa on the permissibility of an operation, while another body considers it impermissible. Undoubtedly, there are acceptable differences, in which the disagreement is justified. There is a variety of jurisprudence, and there are unacceptable differences that lead to turmoil, confusion and mistrust in banking transactions among the general public. This difference may harm the reputation of Islamic banks and weaken confidence in the legitimacy of their products, such as fictitious Murabaha and Tawarruq, whose effects and mechanisms are close to interest-based financing. Therefore, the required balance must be achieved between the different interpretations of legal texts and jurisprudential disputes, in order to achieve more consistency between the legal authorities. 9- The Islamic banks in Saudi Arabia – like their counterparts in many other countries – lack the characteristic of the Last lender when they need liquidity; therefore, they may resort to hedging the risks of liquidity shortage by borrowing from their Islamic banks in the market, which may themselves face a liquidity problem, or perhaps resort to the formation of financial portfolios. There are successful experiences in a number of countries that can be followed in this regard; including the experience of Sudan and Yemen. 10- The lack of sufficient interest on the part of the Islamic banking departments in the aspects of academic research. The amount allocated for research and development in the budgets of these financial institutions is almost none compared to what traditional institutions spend. Without paying attention to this aspect, Islamic financial institutions will lose much of their competitive advantage. With the growth of Islamic financial institutions, its wide spread has increased the need for scientific research, as it plays an important role in the development of these institutions, especially applied studies. Moreover, academic research increases the capabilities of the human resources working in these institutions and rehabilitates them by spreading knowledge of the findings of these research and studies, thus improving the level of performance in them. 11- The problem of developing Islamic financial products is not just in Islamic banks in Saudi Arabia, but rather in the financial industry in general. The development cannot take place in isolation from the development of the financial sector itself, and it is difficult to make significant progress in this aspect, unless many of the governing and regulating aspects of Islamic banking and the incubating environment are changed; e.g. legal, supervisory and legislative aspects, qualified technical human resources, etc… and then the mechanisms and methodology of product development change accordingly, which is one of the biggest challenges facing the Islamic financial services industry. 12- The lack of sufficient human resources trained in Islamic banking in several disciplines and at all administrative levels; however, Islamic banks suffer from this problem in general, in addition to the lack of knowledge of the areas to be trained in, and awareness 37 of developments in the financial services industry. SAMA may seek to cooperate with supervisory authorities, banks and competent bodies for setting standards to determine the areas of human resource scarcity, and holding training programs that meet the increasing demand in the Islamic banking industry globally. 13- The absence of an Islamic financial market in the Kingdom in which various Islamic financial products are traded, including Islamic stocks, sukuk, and others in accordance with what is done in traditional banks, which negatively affects the prospects for the future growth of Islamic banking; namely, in light of the widespread “buy and hold” culture among many investors in the Kingdom of Saudi Arabia. It is necessary to establish an Islamic financial market that guarantees the marketing of the Islamic financial industry products. Islamic banks face great challenges and many obstacles in this aspect. 14- Inadequate capital of Islamic banks in the Kingdom in light of competition in the banking sector and the economic changes taking place worldwide, including the Financial Services Liberalization Agreement, according to which foreign banks can open branches in the signatory countries. Of course, there are banks that have great weight in the world of finance, have technical and administrative expertise, and have Islamic financial products that will present themselves as a strong competitor to Islamic banks in the Saudi market. All this shall undoubtedly affect the performance of these banks negatively, and reduce their opportunities to work. Therefore, they must tend to form strong financial entities that can stand up to this competition, raising their capital adequacy rates and increasing their liquidity. Perhaps the experience that SABB Bank started with Alawwal Bank is a beginning that Islamic banks can benefit from. 15- The lack of databases in Islamic banks; therefore, Islamic bank reports in the Kingdom of Saudi Arabia and other countries greatly lacks of information which are scarce in many cases. Accordingly, it is not possible to analyze and evaluate the status of these banks, which hinders the movement of scientific documentation of Islamic banking. It makes evaluating the experience very difficult, and the international financial institutions suffer from the problem of the lack of this data as well, which is reflected in the evaluation of the experience, and the failure to highlight its successes on a large scale. Therefore, it has become necessary for Islamic financial institutions to adopt the creation of databases for this industry, to provide them with the necessary human and financial resources, and for their outputs to be of a high degree of confidence and credibility. 16- The lack of educational institutions concerned with Islamic finance. A recent study by Ahmed Balwafi on Islamic finance programs in higher education institutions in the GCC countries indicates that the level of programs offered in Islamic finance in these countries do not add up to their contribution to the assets of the Islamic financial industry 125 . The results of the aforementioned study support the fact that the Kingdom of Saudi Arabia – despite its leadership in Islamic finance and economy – ranked 19th worldwide in the number of educational programs in Islamic finance according to the Global Islamic Finance Education study, where the number of such programs was only 8 126 . The results of these two studies constitute a big question mark, as the Kingdom has a well-known precedent and leadership in this field; as the first Department of Islamic 125 Global Islamic Finance Education 2013 (GIFE) 2013 p. 10- 11. 126 In the Competitiveness Report, the Kingdom of Saudi Arabia ranked fourth in terms of scientific research in the field of Islamic finance 38 Economics was established at Umm Al-Qura University in Makkah Al-Mukarramah, and many Master and Ph.D. theses were awarded in Islamic economics, in early periods, before many countries have advanced in the field of education and training in Islamic finance as in nowadays. 17- The lack of qualified and specialized human cadres. Islamic finance has become a specialized academic field with its academic departments, research institutes, and specialized periodical publications, and its importance has increased in light of the great expansion witnessed by the Islamic financial services industry at the present time, and its wide spread worldwide, especially after the global financial crisis. Islamic banks and Takaful insurance companies in Saudi Arabia are not far from these developments. There is a large trend of traditional banks to transform into Islamic banking in the Gulf region, according to the study of the Islamic Bank previously mentioned. Therefore, this transformation must be accompanied by an increase in the number of specialists in that field. 18- Lack of sufficient attention to the aspects of academic research in Islamic finance, which is an important tributary of the progress and development of this industry, and it is noted from the Competitiveness Report in Islamic Finance that there is a major shortcoming in this aspect 127 , where the Kingdom ranked 5th at the level of countries concerned with Islamic finance. 128 Despite the great and estimated efforts of research institutes and academic chairs such as the Institute of Islamic Economics at King Abdulaziz University in Jeddah (formerly the Islamic Economics Research Center), and the Islamic Research and Training Institute, a member of the Islamic Development Bank Group, beside academic chairs in a number of universities, such as the SABIC Chair for Islamic Financial Markets Studies, and the Sheikh Muhammad Al-Rashed Chair for Islamic Banking Studies, but competitively, it seems that additional efforts are needed with the provision of adequate financial and human support to these authorities, in addition to the necessity of activating research units in Islamic banks operating in the Saudi market, especially with regard to financial products. 19- There is a gap between the applied institutions in the Islamic financial industry (banks, insurance companies, financial institutions) and research centers working in this field, and communication is at its lowest levels, and does not contribute to bridging the large gap in this aspect, which requires reconsideration from both sides of the relationship, and overcoming this juncture, in order to have a fruitful relationship, and to turn seriously to the preparation of research and studies needed by the Islamic financial industry. Banks must give research centers a certain amount of information, especially in the applied aspects, as this information constitutes a good material that can be used in academic research. There is cooperation in narrow areas, as some Islamic banks and financial institutions, within the framework of their social responsibility, provide financial sponsorships for the activities and programs of scientific institutes, and the printing of academic theses related to Islamic finance, in addition to mutual invitations between the two parties to attend academic event. 20- The competitiveness of international banks in their entry into the Kingdom’s markets in light of the economic variables that seek to liberalize trade, and the movement of capital across borders, so that these banks can open branches in any member country of the World Trade Organization. In this context, banks with large capitals will present 128 Islamic finance development report 2013 Thomson Reuters 39 themselves as strong competitors to Islamic financial institutions in the Gulf markets, and acquire a share of the labor market. In confirmation of these meanings, a report of the Chambers of Commerce Council stated that Malaysian Islamic banks are heading to exploit the investment gap in the Gulf markets, including the Saudi market, and that Malaysia has established two offices, one in Jeddah and the other in Dubai for follow- up 129 . 3 - The Future of Islamic Finance in the Kingdom of Saudi Arabia Despite the challenges and obstacles facing the Islamic finance industry in the KSA, there are many positive indicators that indicate a promising future for this industry in its various components. Among these indicators are the following: 1- The success achieved by Islamic banks in Saudi Arabia, and the high efficiency that distinguished them over traditional banks, whether in profits, financing, or return on assets, and the great demand for Islamic financial services – based on the data previously received, the regulation of the stock market, and the care received from SAMA. All this gives rise to optimism and hope that the Islamic financial industry will acquire a large share in the financial sector. 2- The large relative shift towards Islamic banking for a group of Saudi banks, such as the National Commercial Bank, Riyad Bank, and Samba Financial Group, and the recent merger between SABB and Alawwal Bank, the multiplicity of Islamic branches in many other banks and the success of these branches, and the demand for their services, will accelerate the thinking towards the complete transformation of Islamic banking or the transformation of a large proportion of these branches, which will expand the market for Islamic banking services. In confirmation of this, a recent study prepared by the Islamic Development Bank indicated that the near future will witness a significant increase in the transformation of traditional banks in GCC countries towards Islamic banking. 3- SAMA has issued many regulations to correct some paths in Islamic finance, such as the insurance market and the financial market; therefore, it is expected that these reforms will lead to attracting more customers by improving the level of service, introducing innovative programs, and providing added services to improve the relationship with customers, which leads to improving the competitiveness of Takaful insurance and its growth in the near future at reasonable rates, taking advantage of the continuous growth in health insurance, and the expected increase in demand for vehicle insurance. 4- The Financial Academy was established in line with Vision 2030 and the initiative of the Financial Sector Development Program to provide various educational and development solutions and to establish confidence in the sector through internationally recognized learning and development solutions, and to set standards and professional certificates that serve the educational and training needs of workers in the banking sector. The establishment of this academy is an opportunity for the financial sector in general, and Islamic banks in particular, to benefit from putting plans, programs and strategies aimed at developing financial products that helps in understanding the vision and mission of the financial institution and contributes to improving the work environment. 129 (Council of Chambers of Commerce. Report of the Council of Chambers of Commerce. 11 Challenges Facing Islamic Banking, p. 4. 40 5- The use of Islamic sukuk in financing some financial sectors in the Saudi market has begun to increase little by little, and interaction with other Islamic sukuk markets such as Malaysia, whose markets are among the largest sukuk markets in the world. Many companies has begun benefiting from the sukuk market in Malaysia, therefore, it is expected that this interaction will contribute to creating more opportunities and interconnection between the Asian and Gulf sukuk markets, and that issuers in the Arab Gulf countries will benefit from the size and diversity of the investors base in Malaysia and the liquidity available in this market. Moreover, the success achieved by the Saudi Electricity Company by issuing the first international 30-year sukuk worldwide in April 2014, and issuing an sukuk amounting to US$ 2 billion in 2018 divided into two segments, the first amounting to $ 800 million (equivalent to SAR 3000 million) and the second with a value of $1,200 million (equivalent to SAR 4,500 million) and this will reassure new issuers. Therefore, it is expected that the sukuk market in the Kingdom will improve better in the near future and the success of these sukuk will contribute to reflecting a good image and a good reputation for Islamic financial products. 6- Establishing an Islamic finance division at SAMA in 2017 is an important factor in promoting the activities of Islamic banking sector. Indeed, this division has begun to organize training programs that meet the increasing demand in the Islamic banking industry globally; i.e. similar to professional qualification programs and compliance programs for companies provided by the Accounting and Auditing Organization for Institutions Islamic Finance in Bahrain. SAMA has ensured the availability of a work environment that supports Sharia-compliant products, including providing specialized training for its employees and bank employees in the field of Islamic banking. 7- The government was interested in making changes in the restructuring of the economy to make the investment environment more attractive, and the arrangements of the Capital Market Authority became effective by focusing on providing incentives to foreign investors, simplifying operations, enhancing transparency, and upgrading the market conditions while moving forward with plans to privatize a number of state-owned assets. These measures have been favored by many international investors, as they began to enter the Saudi market, and there is no doubt that this will contribute to improving the investment environment in the Kingdom and thus Islamic banks can benefit from this change and offer their products widely. 8- SAMA paid attention to making use of modern financial technologies in the financial sector in line with the objectives of the Financial Sector Development Program, and has authorized 30 technology companies to provide new services to individuals and institutions through several new technologies such as crowd- funding platforms, etc… based on the institution's keenness to enhance financial awareness and stimulate savings and finance and investment in the Saudi society. It has become necessary for Islamic financial institutions to find a place for them in this open technical space, and to deal with this renewable technology in providing the best services they have in order to take its share in the financial markets. The financing institutions, financial services providers, investment companies and banks are in a highly competitive position to reach the largest segment of customers, and there is no doubt that these technologies will contribute greatly to the promotion of 41 Islamic banks and improve access to their services and make them available for everyone by establishing a technological system for financial transactions that facilitates communication between investors in the financial technology sector and Islamic banks, and the establishment of a legislative environment that matches the speed of technological innovations. 9- SAMA is moving towards promoting financial inclusion, which is one of the most important objectives of the “Financial Sector Development Program.” This interest will be reflected in doubling financial services for all segments of society, including youth, women and small and medium enterprises, and its effects shall extend to remote areas in villages and deserts, and shall increase the demand for Islamic banking products and services. 10- Success achieved by Islamic banks in Saudi Arabia, and the high efficiency that distinguished them over traditional banks, whether in profits, financing, returns on assets, and the great demand for Islamic financial services– according to the data that was previously presented at the heart of this research – and the system enacted by the state to regulate the cooperative insurance market, the stock market, all of this leads to optimism and hope that the Islamic financial industry will gain a large share in the financial sector. 11- The large relative shift towards Islamic banking for the three largest Saudi banks, namely, the National Commercial Bank, Riyad Bank, and Samba Financial Group shall affect the rest of the banks, based on the standard of success and high profitability, and the great demand for these services; consequently, expanding the market for Islamic banking services. In confirmation of the foregoing, a recent study prepared by the Islamic Development Bank indicated that the near future shall witness a significant increase in the transformation of traditional banks in GCC countries towards Islamic banking. 12- SAMA issued several regulations to adjust the insurance market and its related practices, by amending the methods of calculating technical reserves, and implementing pricing mechanisms. These regulations had positive effects on market results in terms of raising the level of profits in 2014; therefore, it is expected that these reforms may attract more customers by improving the level of service, introducing innovative programs, and providing added services to improve the relationship with customers, which leads to improving the competitiveness of Takaful insurance and its growth in the near future at reasonable rates, taking advantage of the continuous growth in health insurance, and the expected increase in demand for vehicle insurance. 13- Interaction with the Islamic sukuk markets in Malaysia, as some issuing companies in the Arab Gulf, such as Al Bayan Group Holding Company, have begun to benefit from the sukuk market in Malaysia*; therefore, it is expected that this interaction will contribute to creating more opportunities and interconnection between the Asian and Gulf sukuk markets. Thus, issuers in the Arab Gulf countries will benefit from the size and diversity of the investor base in Malaysia and the liquidity available in that market. Moreover, the success achieved by the Saudi Electricity Company by issuing the first international 30-year sukuk in the world in April 2014, shall bring reassurance to new issuers. Therefore, the sukuk market in KSA is expected to improve further in the near future. * Al-Bayan Group Holding Company is the first Saudi issuer to issue sukuk in the Malaysian ringgit, as the company issued Agency Sukuk maturing in 2016 with a value of RM200 million as part of a RM1 billion issuance program 42 4. Conclusion and Recommendations 4/1 Conclusion Despite the Kingdom's large contribution to Islamic finance assets, this industry needs more support by SAMA. The government’s push for the Islamic financing model is one of the most important factors that can help the growth of this industry and enhance its competitiveness. Among the requirements of this promotion are the provision of appropriate policies, the creation of a enabling environment, and the unification of the legal reference for Islamic financial institutions in Saudi Arabia, as well as paying due attention to specialized research centers, education, and of human resources. Despite the great efforts made by SAMA to develop the financial sector and advance it, both at the Islamic and conventional levels, there are some aspects in this industry that need more improvement and support. This requires creating a more harmonious environment that is consistent with the Kingdom’s leadership in Islamic economics and finance. In order to achieve this, it is necessary to improve the environment of Islamic finance in its four sectors: banking, insurance, sukuk, and investment funds; and to overcome all obstacles facing the process of Islamic finance in the aforementioned areas. Then, strive to address the shortcomings in the aspects mentioned in the Global Competitiveness Report related to Islamic Finance; namely: educational and training courses in Islamic finance, educational institutions, academic research, in addition to organizing conferences and symposia related to Islamic finance. Despite the shortcomings referred to, there are many opportunities for the financial services industry, and there is a promising future for it in the Kingdom. With a little effort, the challenges facing the pillars of this industry can be overcome, and the Kingdom shall regain its leadership in Islamic economy and finance. 4/2 Recommendations 1- The available data in this industry remains scarce. Further research is needed to thoroughly cover this topic. Each of the main components of Islamic finance may need to be addressed independently and examined in-depth. 2- It is important that the Islamic financial institutions in the Kingdom provide data in an academic manner for the benefit of researchers and those interested in preparing studies and developmental research that contribute to the progress of the Islamic financial industry. 3- The regulatory and supervisory authorities can present research topics to researchers, institutes and centers specialized in Islamic finance in Saudi Arabia to address specific problems in this industry, evaluate and benefit from the experiences of transforming conventional banks to Islamic banking, as well as Takaful companies. After ensuring its success, implementation may be considered in all branches of the financial sector. 43 5. References 5/1 Arabic References - Al Saud: Abdulaziz bin Sattam bin Abdulaziz, Shariah Quality Policy in Islamic Banking, Sharia Policy Department, Higher Judicial Institute, Imam Muhammad bin Saud Islamic University. - Belwafi, Ahmed Mahdi. Islamic Finance Programs in Higher Education Institutions in GCC Countries: A Comparative Analytical Study, a paper Presented to the Ninth International Conference on Islamic Economics and Finance (ICIEF9). Growth, Justice, and Stability: An Islamic Point of View, Istanbul 09-10 September 2013. - Islamic Development Bank. The development of Islamic economics and the role of the Islamic Economics Research Center, a paper submitted by the Islamic Economics Research Center at King Abdulaziz University, when being awarded the Islamic Bank Prize in the field of Islamic economics for the year 1423 H. - Islamic Development Bank. Brief overview of the Islamic Development Bank Group, 1426 H. - National Commercial Bank. Statement of the Sharia Board of the National Commercial Bank regarding the legality of bank shares subscription. - Turkistani, Abdullah Qurban et al. Findings of an unpublished study entitled Measuring the Degree of Customer Satisfaction (Individuals) on Islamic Banking Services and Products in the Kingdom of Saudi Arabia 1432 H, submitted to a University of Asia and the Pacific University in Japan. - Hassan, Ahmed El-Sayed Abdel-Latif. Insurance & its Economic and Social Role and Challenges, Fakih Center for Research and Development, 1997. - Dar Al Mal Islamic Holding, Annual Report: Dar Al Mal Islamic Holding, 2011. - Albilad Investment Company. Bank Albilad, the insurance sector in the Saudi Stock Exchange. - The Saudi Stock Exchange Company (Tadawul). The Articles of Association of the Saudi Stock Exchange Company. - Al-Tayeb, Ezz El-Din Malik. Curricula and Formulation of Islamic Macroeconomic Theory, Khartoum, J Town Press, 1428 H/2008 G. - Al-Fangari, Mohamed Shawky. The Economic Doctrine in Islam, a research published within the book of Islamic economics, selected research from the First Conference on Islamic economics, the International Center for Islamic Economics Research, 1st Edition, 1400 H / 1980 G. - Al-Fangari, Mohamed Shawky. Al-Wajeez in the Islamic Economy, Dar Al- Shorouk, Cairo, 1994. - Kunduz, Abdul Karim Ahmed. An analysis of the obstacles of sukuk in the Kingdom of Saudi Arabia and the Methods of its Activation: a Comparative Study of the Sukuk Market in the Kingdom, the Sukuk Market in GCC countries, and the Malaysian Sukuk Market. A paper submitted to the First Conference of Business Schools in the universities of GCC countries, King Saud University, during the period 16-17/4/1435 H corresponding to 16- 17/2/2014 G. - Lipper Research, Thomson Reuters, Report on Islamic Mutual Funds 2012 - “The Banker” Magazine, November 2007 Issue, p.4 "The Banker summary of the 1000 Top World Banks." - Islamic Financial Services Board. Report of the Islamic Financial Services Board. May 2015. - Council of Chambers of Commerce. Report of the Council of Chambers of Commerce: 11 challenges facing Islamic banking. 44 - Islamic Financial Services Group, Ernst & Young Middle East and North Africa, Fifth Annual Report of Islamic Investment Funds 2011 - Mohammed, Fadel Abdel Karim. Contemporary International Applications in the Transition Towards Islamic Economics and Finance, the Competitiveness of the Capitals of the Islamic Economy as a Model. A paper submitted to the Forum of Islamic Economics Fiqh in the United Arab Emirates during the period 2-4 Jumada II 1436 H, corresponding to 22–24 March 2015 G. - Mohammed, Fadel Abdel Karim. An unpublished study on the Establishment of the Department of Risk Management and Insurance at the Institute of Islamic Economics at King Abdulaziz University in Jeddah, submitted to the Institute’s Board in Safar 1436 H. - Al-Martan; Said Saad. Controls for Providing Islamic banking services in traditional banks: the experience of the Saudi National Commercial Bank, a paper presented to the symposium of the Supreme Consultative Committee to work on completing the application of Islamic Sharia provisions, Economic Committee, State of Kuwait. May, 1999. - Global Center for Islamic Economics Research. King Abdulaziz University, Selected Research from the First International Conference on Islamic Economics, 1st Edition 1400 H / 1980 G. - Mustafa, Ibrahim Muhammad Mustafa. Evaluating the Phenomenon of the Transformation of Traditional Banks into Islamic Banks: An Applied Study on the Experience of Some Saudi Banks, a Master’s thesis submitted to the Department of Islamic Economics, American Open University, 2006. - Department of General Statistics. Statistical Report, Kingdom of Saudi Arabia, 2012. - Islamic Research and Training Institute. The Islamic Development Bank, a definition of the institute within the publications of the Islamic Research and Training Institute. - The Islamic Institute for Research and Training, the Islamic Bank, an introduction to the Institute within research and training publications. - Al-Manea, Abdullah bin Suleiman. SAMA's Need of Shariah Board to deal with Banking Disputes. Al-Iqtisadiah newspaper, Issue No. 7559, Sunday, Shaaban 24, 1435 H, corresponding to June 22, 2014 G. - Al-Manea, Abdullah bin Suleiman. A lecture in a symposium on Islamic banks, Riyad Bank in Hafr Al-Batin, and the Saudi newspaper "Al-Riyadh" in the Tuesday Issue, May 6, 2008. - SAMA – Monthly Statistical Bulletin, December 2014 - SAMA. Cooperative Insurance Companies Control Law issued pursuant to Royal Decree No. M/32 dated 02/06/1424 H. - SAMA, Insurance and/or Reinsurance Companies Licensed on the SAMA website. - Encyclopedia of the Kingdom of Saudi Arabia, King Abdulaziz Public Library. - Nasser, Adel. A symposium on the “SABB Future and Growth of Islamic Banking” published in Al-Riyadh newspaper, Issue No. 15466, Thursday Dhul Qi’dah 20, 1431 H, corresponding to October 28, 2010 G - Nima, Nagham Hussein. Raghad Muhammad Najm. Islamic Banks and Financial Institutions in the GCC Countries: Reality and Challenges, Al- Qadisiyah Journal of Administrative and Economic Sciences, Vol. 12, 2nd Issue, 2010 G. - Financial Market Authority. Investment Funds, Kingdom of Saudi Arabia, p.2 - Youssef, Mohamed Mahmoud Abdullah. Faculty of Urban Planning - Cairo University, unpublished paper. 45 5/2 Foreign References - Banking sector Performance analysis of Islamic banking: Some evidence, BINTAWIM Samar Saud. - Global Islamic Finance Education 2013 GIFE 2013. - Global Takaful Insights 2013 P1. - Islamic finance development report 2013 Thomson Reuters. - Islamic Finance in OIC Member Countries P2 OIC Outlook Series May 2012. - Islamic Financial Services Industry Stability Report. - Thomson Reuters Islamic finance development report 2013 - Thomson Reuters Zawya Sukuk Perceptions and Forecast. - World Islamic Banking Competitiveness Report. 5/3 Reports • Annual reports of Al Rajhi Bank, 2014, 2013. • Annual Report of Bank Al Jazira 2014. • Annual Report of Dar Al-Maal Al-Islami Holding 2011. • Annual Report of Al Baraka Banking Group, 2014. • Ernst & Young Report for the year 2012. • NCB Report, 2014 • Competitiveness Report in Global Islamic Banking Services. 2014-2013. • Competitiveness Report, World Economic Forum, 2014. • Aljazira Capital report on the Saudi banking and financial services sector. December 2013. • AlJazira Capital Banking and Services Sector Report December 2013. • Bank Albilad Report. The insurance sector in the Saudi market - Albilad financial, 2013 • Report of Lipper Research Company, Thomson Reuters Companies, 2013. • Report of the Islamic Financial Services Board issued in May 2015. • Report of SAMA No. 49, 1434 H/ 2013 G. • SAMA Report No. 51, 1436 H/ 2015 G. • The report of the Ministry of Economy and Planning, Investment in Saudi Arabia: a Secure Place. The Ministry's Website. • Asharq Al-Awsat Newspaper. Tuesday, Dhul Qi'dah 06, 1432 H, corresponding to October 4, 2011. Issue No. 11998. 5/4 Electronic Websites http://units.imamu.edu.sa/colleges/Economics/profile/Pages/default.aspx http://www.mep.gov.sa/themes/ http://www.sagia.gov.sa/ar/ D1E7DF3.beta?event=SwitchLanguag http://www.cma.org.sa/Ar/Pages/Investment_Funds.aspx http://www.sama.gov.sa/ar- sa/News/Pages/News01042015.aspx http://www.alarkan.com/Default.asp http://www.tadawul.com.sa/wps/portal/!ut/p/c0/0495 http://www.sabic.com/corporate http://www.mohe.gov.sa/ar/studyinside/GovernmentUniversities/Pages/default. aspx http://www.argaam.com/article/articledetail/4611614 https://www.mof.gov.sa/Arabic/Pages/Home.aspx CITATIONS (0) REFERENCES (3) ResearchGate has not been able to resolve any citations for this publication. An unpublished study on the Establishment of the Department of Risk Management and Insurance at the Institute of Islamic Economics at King Abdulaziz University in Jeddah * Fadel Abdel Mohammed * Karim Mohammed, Fadel Abdel Karim. An unpublished study on the Establishment of the Department of Risk Management and Insurance at the Institute of Islamic Economics at King Abdulaziz University in Jeddah, submitted to the Institute's Board in Safar 1436 H. Evaluating the Phenomenon of the Transformation of Traditional Banks into Islamic Banks: An Applied Study on the Experience of Some Saudi Banks, a Master's thesis submitted to the Department of Islamic Economics * May 1999 * Said Saad Said Saad. Controls for Providing Islamic banking services in traditional banks: the experience of the Saudi National Commercial Bank, a paper presented to the symposium of the Supreme Consultative Committee to work on completing the application of Islamic Sharia provisions, Economic Committee, State of Kuwait. May, 1999. -Global Center for Islamic Economics Research. King Abdulaziz University, Selected Research from the First International Conference on Islamic Economics, 1 st Edition 1400 H / 1980 G. -Mustafa, Ibrahim Muhammad Mustafa. Evaluating the Phenomenon of the Transformation of Traditional Banks into Islamic Banks: An Applied Study on the Experience of Some Saudi Banks, a Master's thesis submitted to the Department of Islamic Economics, American Open University, 2006. -Department of General Statistics. Statistical Report, Kingdom of Saudi Arabia, 2012. -Islamic Research and Training Institute. The Islamic Development Bank, a definition of the institute within the publications of the Islamic Research and Training Institute. -The Islamic Institute for Research and Training, the Islamic Bank, an introduction to the Institute within research and training publications. SAMA's Need of Shariah Board to deal with Banking Disputes. Al-Iqtisadiah newspaper * Jun 2014 * Al-Manea Al-Manea, Abdullah bin Suleiman. SAMA's Need of Shariah Board to deal with Banking Disputes. Al-Iqtisadiah newspaper, Issue No. 7559, Sunday, Shaaban 24, 1435 H, corresponding to June 22, 2014 G. Advertisement RECOMMENDATIONS Discover more Project ISLAMIC FINANCE * Fadul Albashir View project Article CUSTOMERS’ PERCEPTIONS TOWARD ISLAMIC BANKING IN THE GULF REGION February 2021 · TURKISH JOURNAL OF ISLAMIC ECONOMICS * Ambreen Khursheed * Maham Fatima * Faisa Mustafa In the past decade, Islamic banking (IB) has seen incredible growth. The purpose of this study is to determine the factors affecting perceptions of customers to adopt Islamic banking and finance. The primary data is collected through a questionnaire survey, conducted amongst university students and bank employees from three Gulf Cooperation Council (GCC) countries (UAE, Kuwait, and Saudi Arabia). ... [Show full abstract] This study applies a regression model by analyzing understanding (U), awareness (A), religious inspiration (RI), customer innovativeness (CI), and perceived risk (PR) as independent variables and customer perception (CP) as a dependent variable. The results indicate inclusively that perceptions of customers are optimistic regarding Islamic banking and finance. The findings reveal that all independent constructs significantly influence the perceptions of customers about Islamic financing. Resultantly, the research outputs have significant implications for Islamic regulatory bodies. The foremost implication of this research is to promote academic linkages with the banking sector, i.e. to conduct research studies related to customers’ perceptions about Islamic banking in other GCC countries. This research contributes to enhancing the theoretical perspective of customers’ perception to consider Islamic banking services and gives practical suggestions to help marketers of Islamic banks to maximize outreach. Moreover, the results can serve as a directive factor for future studies. Read more Article SHARĪʿAH-COMPLIANCE RATINGS OF THE ISLAMIC FINANCIAL SERVICES INDUSTRY: A QUANTITATIVE APPROACH October 2018 · ISRA International Journal of Islamic Finance * Muhammad Hanif Abstract Purpose This study aims to develop a Sharīʿah-compliance rating mechanism for the Islamic financial services industry (IFSI), with a special focus on banking. The banking sector is taken as the area of focus due to its leadership role in the volume of global Sharīʿah-compliant assets. Design/methodology/approach The objectives of the Islamic financial system (IFS) are selected as the ... [Show full abstract] basis for ratings. A range of performance indicators (leading to achievement of the objectives) is grouped into four broader categories and used in the study to allocate scores with a sum total of 100. Special considerations – including the amount of resources required in performing an activity, suitability of prevailing business conditions, the degree of compulsion/discretion in performing a task and linkage with the essence of the IFS – were taken into account in the allocation of scores. Findings This study groups multiple performance measures into four categories, including portfolio construction (deposits mechanism, participatory and asset-based modes of financing), access to finance (service to the less-privileged and sector screening), reputation (disclosures and stakeholders’ survey) and Sharīʿah governance (Sharīʿah supervision and controls, charitable operations, human resources, product development and organization). The Portfolio, Audit, Reputation and System (PARS) rating system is then developed. Practical implications A Sharīʿah-compliance rating system is helpful in measuring the progress towards goal achievement of the IFS and in gaining stakeholders’ trust. It is also important for Sharīʿah boards and regulators in policy formulation, for management in addressing weaknesses and taking corrective measures and potentially for standard-setting bodies. Originality/value This study presents a comprehensive quantitative Sharīʿah-compliance rating mechanism, taking into consideration the objectives of the IFS – equitable distribution of wealth and financial stability, in addition to Sharīʿah-compliance in operations. Development of Sharīʿah-compliance quality ratings for Islamic banking is essential to gain customers’ trust; the suggested methodology is thus a contribution to the literature on Islamic finance. Available free: https://www.emeraldinsight.com/doi/full/10.1108/IJIF-10-2017-0038 Keywords: Sharīʿah governance, Islamic banking portfolio, Sharīʿah-compliance ratings, Sharīʿah audit, Islamic financial services Read more Article IS IT REALLY NEEDED TO HAVE A SPECIAL LAW GOVERNING ISLAMIC BANKING? A CROSS COUNTRY ANALYSIS April 2014 * M Ashraful Mobin The presence of an appropriate legal and regulatory structure is vital for an “enabling environment” that provides healthy development and growth of financial markets. It is more relevant to the Islamic banking services industry, where various types and degrees of risk arise from the complex nature of Shari'a-compliant investments and continual innovation of financial products. This study finds ... [Show full abstract] that there is no proof that simply because a country applies the same legal framework for Islamic and conventional finance, the development of the Islamic financial services industry will be hampered and stagnant. A number of countries in the having special law do not have vibrant Islamic finance activities as seen in Saudi Arabia or the UK without special law. However it is easily noticed that regional Islamic finance hubs such as Bahrain, Malaysia and the UAE have adopted frameworks that are more actively supportive of Islamic finance. If the regular law is sufficient enough to meet the actual purposes of Islamic banking industry then the necessity of special is not very required. But special law is mandatory if the regular law fails to give a perfect solution. Read more Article Full-text available ISLAMIC FINANCE: WRITINGS OF V SUNDARARAJAN October 2017 * Sachita Yadav A description of three critical issues, viz., issuance of government securities under Islamic finance Principles, development of monetary instruments under Islamic banking and issues in institutional arrangements for monetary operation are given. The author has also emphasized on various hindrances like underdeveloped interbank and money markets as well as government funding instruments, limited ... [Show full abstract] availability and access of facilities, legal uncertainties and limited market infrastructure which are responsible for lack of hedging instruments and techniques in Islamic Finance. Chapter seven, titled Towards Developing a Template to Assess Islamic Financial Services Industry (IFSI) in the world Bank: IMF Financial Sector Assessment Program (FSAP), is a new chapter added in this book. View full-text Chapter ISLAMIC FINANCE: THE REGULATORY CHALLENGE March 2012 * Elisabeth Jackson-Moore Read more Last Updated: 22 Dec 2021 Discover the world's research Join ResearchGate to find the people and research you need to help your work. Join for free ResearchGate iOS App Get it from the App Store now. Install Keep up with your stats and more Access scientific knowledge from anywhere or Discover by subject area * Recruit researchers * Join for free * Login Email Tip: Most researchers use their institutional email address as their ResearchGate login PasswordForgot password? Keep me logged in Log in or Continue with Google Welcome back! Please log in. Email · Hint Tip: Most researchers use their institutional email address as their ResearchGate login PasswordForgot password? Keep me logged in Log in or Continue with Google No account? Sign up Company About us News Careers Support Help Center Business solutions Advertising Recruiting © 2008-2021 ResearchGate GmbH. All rights reserved. * Terms * Privacy * Copyright * Imprint