ISSUES OF ISLAMIC LETTERS OF CREDIT IN TRADE FINANCE
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Date
2015-10-27
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Publisher
UMT, Lahore
Abstract
Islamic Banking happens to be one of the fastest growing sectors in the global Banking
Industry. With the growth of the Islamic Banking and it‟s various departments, there has been
a significant development in the Islamic Banking Trade Finance products. Letters of Credits
have always played a very important role in the Trade Finance Departments. However, the
structure of Letter of Credits in case of Islamic Banking is somewhat different than the
convention letters of credit. An attention-grabbing research study in this context is to find out
the issues that are faced during the progressive implementation of Islamic Letters of Credit.
The main aim of the research study is to carry out a detailed investigation into
implementation of Islamic letters of credit and find the issues during various phases of
execution; furthermore the dependency of various factors effecting the application of Islamic
Letters of credit was determined. The study was conducted using both qualitative and the
quantitative data collection methods. The primary data collected was analysed to study the
relationship amongst different variables of the study and dependency on one another. It was
found that the Islamic Branding, Quality Services and the Shariah compliance all have
positive relations and dependency on one another. From the results of the study it was
concluded that along with the personal interest of Islamic Mind set people; the understanding
and knowhow of the Islamic Banking is necessary for the Islamic Banking and Trade
Practitioners so that they may educate their customers and overcome the issues that arise
during the implementation of Islamic Letters of Credits.