Abdel-Maoula Chaar

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Sharia’, Finance and Strategy. Abdel-Maoula Chaar. Strategic Management for IFIs. Porter five forces. AM Chaar – Introduction – 5 th Islamic banks and financial institutions conference – Damascus 2010. Strategic Management for IFIs. Porter five forces. - PowerPoint PPT Presentation

Text of Abdel-Maoula Chaar

  • Abdel-Maoula ChaarSharia, Finance and Strategy

  • Strategic Management for IFIsPorter five forcesAM Chaar Introduction 5th Islamic banks and financial institutions conference Damascus 2010.

    Field of Finance

    Rivalry among firms

    Suppliers

    New Entrants

    Clients

    Substitute Products

    THREAT

    BARGAINING POWER

    BARGAINING POWER

    THREAT

  • Strategic Management for IFIsPorter five forcesAM Chaar Introduction 5th Islamic banks and financial institutions conference Damascus 2010.

    Field of Finance

    Rivalry among firms

    Suppliers

    New Entrants

    Clients

    Substitute Products

    THREAT

    BARGAINING POWER

    BARGAINING POWER

    THREAT

    Field of Finance

    Rivalry among firms

  • Strategic Management for IFIsRivalry Among firmsAM Chaar Introduction 5th Islamic banks and financial institutions conference Damascus 2010.

    Western Finance

    Islamic Finance

    Islamic Market

  • Porter five forcesStrategic Management for IFIsRivalry among firmsAM Chaar Introduction 5th Islamic banks and financial institutions conference Damascus 2010.

    Field of Finance

    Sharia compliancy

    New Entrants

    Clients

    Substitute Products

    NO threat

    LOWbargaining power

    NO threat

    HIGHTbargaining power

    Suppliers

    Clients looking exclusively for Sharia compliant products

    Islamic banks. New entrants contribute to the expansion of the market

    - Sharia scholars with business knowledge- Banking specialists with Sharia knowlege

    - Potential market of 1.6 billion people- Concentration of wealth

    Field of Finance

    Sharia compliancy

  • Islamic finance factsThe distribution of IFIsAM Chaar Introduction 5th Islamic banks and financial institutions conference Damascus 2010.

  • Islamic finance factsIslamic markets characteristics951 billions Sharia compliant assets 799 billions banking assets 152 billions under management1 trillion target expected in 201020-30% annual growth rateAM Chaar Introduction 5th Islamic banks and financial institutions conference Damascus 2010.

  • Islamic finance factsThe distribution of Islamic assetsAM Chaar Introduction 5th Islamic banks and financial institutions conference Damascus 2010.

  • Islamic finance factsIslamic markets characteristics951 billions Sharia compliant assets 799 billions banking assets 152 billions under management1 trillion target expected in 201020-30% annual growth rateAM Chaar Introduction 5th Islamic banks and financial institutions conference Damascus 2010.

  • Islamic finance factsIslamic markets characteristics951 billions Sharia compliant assets 799 billions banking assets 152 billions under management1 trillion target expected in 201020-30% annual growth rateAM Chaar Introduction 5th Islamic banks and financial institutions conference Damascus 2010.

  • Islamic finance factsGrowth of Islamic banking assetsAM Chaar Introduction 5th Islamic banks and financial institutions conference Damascus 2010.

  • Porter five forcesStrategic Management for IFIsAM Chaar Introduction 5th Islamic banks and financial institutions conference Damascus 2010.

    Field of Finance

    Sharia compliancy

    New Entrants

    Clients

    Substitute Products

    NO threat

    LOWbargaining power

    NO threat

    HIGHTbargaining power

    Suppliers

    Clients looking exclusively for Sharia compliant products

    Islamic banks. New entrants contribute to the expansion of the market

    - Sharia scholars with business knowledge- Banking specialists with Sharia knowlege

    - Potential market of 1.6 billion people- Concentration of wealth

  • Islamic finance factsIslamic markets characteristics HNWI and UHNWI on the riseAM Chaar Introduction 5th Islamic banks and financial institutions conference Damascus 2010.

  • Islamic finance factsHNWI expected annual growth (2006-2011)Islamic markets characteristicsAM Chaar Introduction 5th Islamic banks and financial institutions conference Damascus 2010.

    9,50%

    8,50%

    7,20%

    7,00%

    6,10%

    4,30%

    Middle - East

    Asia Pacific

    Latin America

    North America

    Africa

    Europe

    1%

    2%

    3%

    4%

    5%

    6%

    7%

    8%

    9%

    10%

  • Islamic finance factsIslamic markets characteristics HNWI and UHNWI on the rise Affluent Segment: Young, active, optimistic Financial markets and financial services underdevelopedAM Chaar Introduction 5th Islamic banks and financial institutions conference Damascus 2010.

  • 1. Citi-Islamic -2. HSBC Amanah -3. Noriba (UBS) 4. BNP Paribas Najmah -5. Calyon Islamic Window Islamic finance factsConventional banks Islamic vehiclesAM Chaar Introduction 5th Islamic banks and financial institutions conference Damascus 2010.

  • Window Models Used by banks to carry out altogether Islamic and conventional financial operations

    Branches Dedicated delivery channels for Islamic finance products

    Subsidiaries Separate legal entities used to offer Islamic finance productsIslamic finance factsConventional banks Islamic vehicles

  • Strategic Management for IFIsThe dynamic of Islamic and western financial fields AM Chaar Introduction 5th Islamic banks and financial institutions conference Damascus 2010.

    Western Finance

    Islamic Finance

    Islamic Market

    Western Finance

    Islamic Finance

    Islamic Market

  • Strategic Management for IFIsThe dynamic of Islamic and western financial fields AM Chaar Introduction 5th Islamic banks and financial institutions conference Damascus 2010.

  • Strategic Management for IFIsAM Chaar Introduction 5th Islamic banks and financial institutions conference Damascus 2010.Porter five forces

  • Only Islamic 20%Sacrifice returns/service for full Sharia complianceLooks for pure Islamic players Islamic if equal performance 40%Will not sacrifice returns/service for Sharia complianceSharia compliance is a bonus Value-Seekers 30%Looks for the best performance regardless the bank identityOnly conventional 10%Strategic Management for IFIsDifference in Islamic sensitivityErnst & Young (2008). The Islamic funds and investments report.

  • Strategic Management for IFIsThe dynamic of Islamic and western financial fields AM Chaar Introduction 5th Islamic banks and financial institutions conference Damascus 2010.

    Western Finance

    Islamic Finance

    Islamic Market

    FinanceIslamique

    Islamic Market

    Western Finance

  • ApplicationsThe Islamic Finance ParadigmThe specificities of the Sharia

  • The Islamic Finance ParadigmThe Paradigm

    Islamic Finance

    ShariaStewardship(Stakeholders primacy)

    Quran / SunnaTawhid

    MaslahaOptimizingstakeholders benefits

  • The Islamic Finance ParadigmThe specificities of the Sharia

  • The Islamic Finance ParadigmThe specificities of the Sharia

  • Strategic Management for IFIsThe dynamic of Islamic and western financial fields AM Chaar Introduction 5th Islamic banks and financial institutions conference Damascus 2010.

    IslamicFinance

    Ethics & Social Responsability

    IslamicFinance

    Research and Development

  • Strategic Management for IFIsPorter five forcesAM Chaar Introduction 5th Islamic banks and financial institutions conference Damascus 2010.

    IslamicFinance

    Ethics & Social Responsability

    New Entrants

    Clients

    Substitute Products

    LowThreat

    No powerplay

    No powerplay

    Suppliers

    Ethical banks

    - Sharia scholars with business knowledge- Banking specialists with Sharia knowledge- Universities and business schools

    LowThreat

  • Strategic Management for IFIsThe dynamic of Islamic and western financial fields AM Chaar Introduction 5th Islamic banks and financial institutions conference Damascus 2010.

    EthicsCSR

    Islamic Finance

    Western Finance

    Modern Finance

  • Strategic Management for IFIsPorter five forcesAM Chaar Introduction 5th Islamic banks and financial institutions conference Damascus 2010.

    IslamicFinance

    Ethics & Social Responsability

    New Entrants

    Clients

    Substitute Products

    LowThreat

    No powerplay

    No powerplay

    Suppliers

    Ethical banks

    - Sharia scholars with business knowledge- Support institutions- Universities and business schools

    LowThreat

  • Education in Islamic FinanceStrategic Management for IFIs

  • Education in Islamic FinanceStrategic Management for IFIs

  • Abdel-Maoula ChaarThank you

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