EUROPEAN CENTRAL BANK and Islamic finance
European Central Bank,"Islamic Finance in Europe ", Occasional Paper Series No 146 / June 2013. The paper examines the development of and possible prospects for Islamic fi nance, with a special focus on Europe. It compares Islamic and conventional fi nance, particularly as concerns risks associated with the operations of respective institutions, as well as corporate governance. The paper also analyses empirical evidence comparing Islamic and conventional financial institutions with regard to their: (i) efficiency and profitability; and (ii) stability and resilience. Finally, the paper considers the conduct of monetary policy in an Islamic banking context. This is not uncomplicated given the fact that nterest rates – normally a cornerstone of monetary policy – are prohibited under Islamic finance. Liquidity management issues are thus discussed here, with particular reference to the euro area.