Aldohni, Abdul Karim --- "The Bank that Rocked: Does the Problem Lie in the Global Business Model of Conventional Banking?" [2011] ELECD 615; in Gray, Joanna; Akseli, Orkun (eds), "Financial Regulation in Crisis?" (Edward Elgar Publishing, 2011)

Book Title: Financial Regulation in Crisis?

Editor(s): Gray, Joanna; Akseli, Orkun

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781848445543

Section: Chapter 6

Section Title: The Bank that Rocked: Does the Problem Lie in the Global Business Model of Conventional Banking?

Author(s): Aldohni, Abdul Karim

Number of pages: 19

Extract:

6. The bank that rocked: does the
problem lie in the global business
model of conventional banking?
Abdul Karim Aldohni

INTRODUCTION

The current global financial crisis can be described as the worst in
recent history. One of the key factors that amplified the scale of this
crisis is the global nature of the banking and financial market. This
chapter aspires to, first, explore the concept of `global economy' and
address the implications of having globally interconnected banking
and financial markets; second, to analyse the business model that
conventional banks use in particular Northern Rock; third, to intro-
duce the concept of Islamic finance; and finally to evaluate the per-
formance of Islamic financial institutions in the light of the current
financial turmoil.


GLOBALISATION AND THE CONCEPT OF THE
`GLOBAL ECONOMY'

Phrases such as `Globalisation', `global community' and others
that are similar have been used frequently in the last two decades to
describe the high level of interconnectivity that characterises today's
world.
The concept of globalisation has not appeared suddenly but rather
it developed gradually over a lengthy period of time. One of the
earliest forms of globalisation is economic globalisation. For most
economic theorists globalisation is a natural and eventual result of
economic evolution. It could be to the surprise of many that Karl
Marx, whose ideas represent the very foundation of communism,

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had predicted globalisation as an eventual outcome. However, the
globalisation that he described as `the universal interdependence of
nations' is ...