Category Archives: Financial crisis of 2008

Shariah bankers: West ready for faith-based alternative

Shariah bankers: West ready for faith-based alternative

wall_street

Backers of Shariah-compliant finance see an opportunity for expansion amid the global economic downturn, and some Western banks are welcoming this growing source of new business.

"Islamic bankers should do some missionary work in the Western world to promote the concept of Shariah banking, for which many in the West are more than ready now," Indonesian President Susilo Bambang Yudhoyono said at the World Islamic Economic Forum last month in Jakarta.

Such statements have given rise to fears that Shariah finance is a stalking horse for hidden political or religious aims. Shariah finance is an extension of Islamic law, pushing a faith-based alternative to Western banking.

Read the rest …

Islamic bankers have escaped the worst financial pain

Islamic bankers have escaped the worst financial pain

boat in lake

Shaun Springer, Chief Executive of Napier Scott Search said, ‘Four years ago, you would have had difficulty finding sufficient Islamic Banking people to warrant a survey. This sector has grown to such a critical mass with every global, European and Arabic institution involved that it now justifies one.’

William Allum, who heads Napier Scott’s Middle East practice said, ‘We are seeing pay scale differentials favouring Islamic Banking because of a shortage of skilled, experienced staff. A managing director in Sharia’a structuring, for example, can expect to receive a combined salary and bonus of £275,000, whereas a similar post in say Russia would attract £200,000, a significant different.’

Read the rest …

The answer to the global financial crisis lies in Islamic finance

The answer to the global financial crisis lies in Islamic finance

burj-dubai-skyscraper-2

A small idea is developing into a big hope in the Middle East. It is that the answer to the global financial crisis lies in Islamic finance.

Proponents of the $800bn industry argue that the prohibition on dealing in interest has saved Islamic institutions, preventing them from investing in all the dubious structures that have brought down high-flying international institutions.

Read the rest …

Innovation and authenticity in Islamic Finance: M. Umer Chapra

Innovation and authenticity in Islamic Finance: M. Umer Chapra

This paper—delivered at the Eighth Harvard University Forum on Islamic Finance in April 2008—tries to determine the primary cause or causes of the financial crises that have plagued almost every country around the world over the last three decades. Of particular significance are the 1998 LTCM breakdown and the current subprime mortgage crisis in the United States. It argues that one of the major causes of these crises is the lack of adequate market discipline in the financial system. This leads to excessive lending, high leverage and ultimately the crisis. Risk-sharing, which Islamic finance wishes to introduce, can help instill greater discipline in the system and curb lax lending. Effective operation of such a system in Muslim countries will, however, not be possible without the establishment of a number of shared institutions that do not exist at present. It is also necessary to adopt a number of specific measures to make credit available to small- and micro-entrepreneurs in order to make the existing financial system more equitable.

Read the paper here

If everybody was Shariah-compliant, there would be no recession

Islamic laws of finance a cushion in hard times

sofa

The recession gripping the nation has taken less of a toll on American Muslims who follow age-old Islamic laws against paying – or charging – interest.

They’ve also been shielded by socially responsible retirement plans because Shariah– Islamic law – forbids investments in banks and mortgages as well as tobacco, alcohol, gambling, pornography or weapons.

"If everybody was Shariah-compliant, there would be no recession," said Farouk Fakira, a Yemeni immigrant who moderated a discussion on Islamic finance at Sacramento’s Masjid Annur last week.

Read the rest …