Xinyi Lu

(University of New Haven, West Haven, CT, 06516, USA)

 

 

Abstract: Islamic law (i.e., Sharia) has significant influence on Muslims attitudes toward financial service. Recognizing the needs for finance services in a modern economy and Muslims’ preferences over Sharia-compliant financial services, Muslim economists proposed the Islamic banking-a banking system that provides financial services that conform to Islamic law and moral code. China is the country with the third largest number of Muslims living as minorities and survey results indicate that there are demands for Sharia-compliant financial products and services among Chinese Muslims. However, as of today, there are just few financial institutions in China offering Sharia-compliant financial products and services on a pilot basis. This paper reviews the history and current status of the Sharia-compliant financial products and services provided by the financial institutions in China. It also investigates the reasons why Islamic banking is not yet an established part of the banking services in China. Since providing banking services to the entire population is important for developing countries like China, the paper makes recommendations on removing barriers for financial institutions to expand their outreach to Chinese Muslims.

 

Key words: banking services; Muslims; China

 

JEL codes: G20, P20, Z12