In Egypt migrant remittances and the flow of petrodollars in the era of the oil boom provided capitalization of Islamic banks and a host of Islamic investment companies that operated outside the system of state regulation. Such bankers drew on the rapidly growing wealth of those businessmen with long-standing connections in the Gulf, including, most importantly, members and sympathizers with the Muslim Brotherhood (MB). This boom in labor export and remittance flows also helped shape Egyptian national economic functions, out-migration and the burgeoning informal economy afforded the Egyptian state enough “relative autonomy” to allow it to expand the private sector and begin to decentralize the country’s economic system. It enabled the Egyptian state to relax foreign exchange regulations to stimulate a foreign capital influx. However, the unintended consequences of these policies were opening the door for Islamic financial institutions, which helped finance and popularize the middle class-based Islamic movement.

This chapter addresses the growth of Islamic banks and finance in the UK. It begins with a brief historical overview of the informal institutions that were forerunners to Islamic banks and their development into a thriving global industry in which the UK is a leading player. It proceeds to survey the distinguishing features of Islamic banking and typical financial products before charting the innovative regulatory reforms that permitted the industry to expand. A section on the small volume of English case law highlights the standard but manageable issues arising from its continuing organic growth. The subsequent section models the two conventional theoretical approaches to the rise of Islamic banks and the regulatory means used to achieve it, as well as the problems with these interpretations. The final section sets out a pluralist response offering the best explanation and justification for these developments. It concludes with an appraisal of the problem of informal financial instruments and an optimistic assessment of the industry and the new formal institutions created, falling as they do within the general regulatory framework of the UK’s financial system.

In Egypt migrant remittances and the flow of petrodollars in the era of the oil boom provided capitalization of Islamic banks and a host of Islamic investment companies that operated outside the system of state regulation. Such bankers drew on the rapidly growing wealth of those businessmen with long-standing connections in the Gulf, including, most importantly, members and sympathizers with the Muslim Brotherhood (MB). This boom in labor export and remittance flows also helped shape Egyptian national economic functions, out-migration and the burgeoning informal economy afforded the Egyptian state enough “relative autonomy” to allow it to expand the private sector and begin to decentralize the country’s economic system. It enabled the Egyptian state to relax foreign exchange regulations to stimulate a foreign capital influx. However, the unintended consequences of these policies were opening the door for Islamic financial institutions, which helped finance and popularize the middle class-based Islamic movement.