Overview of Financial Institutions in the United Arab Emirates

This report will explore the various aspects and nuances of Financial Institutions within the UAE and some of the advantages and disadvantages that are a result of this unique system. The UAE is a relatively new nation despite its financial success and rapid development. This rapid development coupled with the establishment of the common currency between the 7 Emirates has led to the establishment of the Central Bank of the United Arab Emirates in 1980. The uniting of multiple Emirates and the development of a common currency helped stimulate the rapid growth of the UAE's Financial Markets. This growth was inevitable with the success of a vision of the Nation's Leaders. However, rapid growth combined with the global appeal has attracted a diverse population that has catapulted the nation onto a global stage. This environment is attractive to many and this brings foreign commerce and business. With the influx of foreign business and currency comes the need to acquire a financial model capable of handling these transactions and trade. This has led to the need to adopt the western finance models, financial institutions, and trade markets. This growth and global inclusion can leave room for unwanted financial practice, opinion, and influence if not regulated properly. To protect the Nation's interests, the UAE found a way to incorporate Shariah Law into transactions and practice laws. This unique scenario has led UAE to quickly become the leading force in the development of modern Islamic finance. However, with this rapid growth, the need for neutral regulation and regulatory bodies became more evident as efforts have been made to establish Financial regulation to ensure the Islamic standards are upheld. This review will explain further the different types of Institutions in place in this Islamic Financial Market. The regulations, financial developments, and challenges will be explained in more detail to examine the effectiveness of this style of Finance and how it supports the Nation's unique needs