Chapter

The Kuwait Finance House and the Islamization of Public Life in Kuwait

Kristin Smith

in The Politics of Islamic Finance

Published by Edinburgh University Press

Published in print February 2004 | ISBN: 9780748618361
Published online March 2012 | e-ISBN: 9780748653089 | DOI: http://dx.doi.org/10.3366/edinburgh/9780748618361.003.0008
The Kuwait Finance House and the Islamization of Public Life in Kuwait

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In the mid-1970s, the Arab countries of the Gulf made a dramatic entrance into the world financial markets. In a single year oil prices quadrupled, precipitating the most rapid transfer of wealth in the twentieth century. As a result of this infusion of petrodollars, many gulf citizens who previously had no dealings with formal financial institutions had their first introduction to banking. However, it immediately became apparent that the institutions and norms of Western finance were incompatible with the prevailing belief in the Arab world that interest is forbidden by Islam. This combination of wealth and piety made the Gulf an ideal market for the revival of Islamic banking. By appealing and upholding the religion of Islam, entrepreneurs adapting Islamic financial principles to modern banking institutions were able to pierce through oligarchic banking sectors, and succeeded in making the Gulf the centre for Islamic commercial and investment. In addition, entrepreneurs who were appealing to the religious values of Islam gained political influence and powerful resource for political battles. Kuwait is one of the examples that demonstrates the successfully synergy between economic activity and Islamist politics. This chapter offers an analytic history of Kuwait's only Islamic bank, the Kuwait Finance House (KFH). Its first two sections examine the political context that led to the establishment of KFH. The chapter then provides a study of the bank's economic and marketing strategies, with emphasis on the synergies that are generated between the bank's pursuit of profit and the Islamists' pursuit of political power. Particular attention is paid to the socio-politics of KFH. By associating financial activities to religious values and beliefs, the KFH is both an epitome and a leader of the growing Islamisation of Kuwait. The chapter ends with a discussion on the future of KFH and of Islamic finance in Kuwait.

Keywords: Gulf; Kuwait; Kuwait Finance House; pursuit of profit; political power; socio-politics; Islamisation of Kuwait

Chapter.  10199 words.  Illustrated.

Subjects: Society and Culture

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