How are Islamic banks operating in Lebanon?

Abstract

Islamic banking is spreading all over the world from the Far East to the West. Islamic banks are concentrated mainly in the Gulf countries and East Asia and have started operating in Lebanon after the passing of the law of Islamic banking in 2004. This paper studies Islamic banking in Lebanon. The paper will start by introducing the basics of Islamic economy and Islamic banking. Next, the paper will introduce Islamic banking worldwide before introducing the five operating Islamic banks in Lebanon and analyzing their financial data comparing them to conventional banks. Then challenges facing Islamic banks and their expected future are introduced. Several challenges are facing Islamic banks affecting their growth and development and preventing them from competing with conventional banks. The paper concludes that Islamic banks are growing slowly in Lebanon where they represent less than one percent of total assets of the Lebanese banking sector. Moreover, Islamic banks in Lebanon are affected by the operation of conventional banks that are controlling the Lebanese banking sector. The paper ends up showing some implications. One and most important proposed implication is that Islamic banks in Lebanon must cooperate together in order to get over the difficulties and achieve continuity.