How did the UAE become a major banking hub?
The success story of the UAE’s banking and financial sector is based on external geopolitical developments and internal strategic policies to diversify the local economy. Before the Lebanese Civil War outbreak in 1975, Beirut was the leading banking hub of the Middle East and North Africa. Most financial institutions first shifted to Bahrain before settling in the UAE, mainly for the favorable conditions for business. The competitive advantages of the UAE’s banking sector are found in the fintech and cryptocurrency segments, as well as the Islamic banking sector.Islamic Banking in the UAE
The total value of Islamic banking assets in the UAE is around 631 billion Emirati dirhams, around ten percent of the global Islamic banking assets. In contrast to conventional banking, Islamic financial institutes follow Islamic law and regulations. Therefore, those banks cannot charge or pay interest, engage in speculation, and have to share any business risk with their partners. They can, however, invest in ventures that conform to the Muslim faith.
