Underreported: Islamic Finance

Thursday, January 15, 2009

Find out about the growing trend of Islamic finance – banking and investing based on the Koran – and how it’s faring in the current global economic crisis. Journalist Carla Power is and author of the Jan./Feb. Foreign Policy magazine article "Faith in the Market."


Carla Power

Comments [14]

Nasim Siddiqi from New York

I really appreciate Carla's work on Islamic Finance, just for further info, UK Treasury, US Treasury and FED NY are closely monitoring Islamic Finance module and have very strong say in the policy specially in the MENA region.

Jan. 18 2009 01:24 PM
samir from Bay Ridge


"I know by knowledge that 99%9 Americans are ignorant about Islam and its doctorine thats why they make false accusation about Islam without understanding of Islamic juriprudance."


Please provide some evidence that to your bizarre assertion above.

It's not helping whatever agenda your pushing - it's a silly statement.


Jan. 16 2009 01:15 PM
Shahin Khalisdar from NYC

I have carefully read some of the comments. The comments do not surprised me. When I was teenage, I have finihed 10 years of Islamic study in 3 and half years and finished Highschool diploma and was senior at Mercy college. I do understand both side arguments. I know by knowledge that 99%9 Americans are ignorant about Islam and its doctorine thats why they make false accusation about Islam without understanding of Islamic juriprudance. The so-called Muslim world was British,France and Italy colonies.1858-1930 British had put educational system in all of its colonies and intentionally avoid any Islamic interfarance thats why all Muslim countries follow their master and ignore Islamic scholars. It is not that they do not want Sharia but their inner circule they want to be like their previous master.
I strongly dislike to hear the Sharia based Economy because the Saria economy's foundation lay on Honesty, Righteousness, Truthfulness and Western Economy found on Greed and Opportunity. Therefore both side will never adjust.

Jan. 16 2009 11:49 AM
Ashraf from Rockland County

15 % interest rate is considered high by western standards. Imagine a 15 % mortgage and how prohibitive that would be. Calling the Islamic system as a complicated system is inaccurate as there is nothing more complicated than the western financial system and the mess it got us into. Again, in non-Muslim countries, full Islamic laws can never be the laws of the land. The only point I am trying to make is that one has to be objective in his/her criticism. Don’t just dismiss it because you disagree with Muslims and/or their religion and/or lifestyle. If you do, that's your preference too.

Jan. 15 2009 04:17 PM
Ashraf from Rockland County

Islamic Finance Laws are for Muslims because that's part of the religion. They cannot be made the law of the land unless it's a Muslim country. For others to follow, it would be their personal choices and it would not be due to religion as in the case for Muslims adherence to these laws. Anyway, you will find opposition to these laws in Muslim countries because those people are benefiting from the Western system.

Jan. 15 2009 03:46 PM

How has the Basel Int'l banking standards adopted to Islamic Finance

Jan. 15 2009 01:58 PM
joy brighton

Where have scholars been schooled? Shariah Scholars not only believe in Shariah Finance but Shariah Islamic Law. Shariah Law is is a complete body of law..that demands a total way of life...political beliefs, military beliefs, hygience, sexual, is not about finance it is about Shariah law...Why aren't you talking about Shariah Law???

The only country wiht 100% of assets in Shariah finance is Iran. Even Saudi Arabia did not create it's first Shariah bank until 2004, because the royal family did NOT want to enable Shariah extremists.

Jan. 15 2009 01:57 PM
Amy from Manhattan

Thanks for this segment--very interesting. There are similar concerns in Jewish observance w/respect to lending on interest, & similarly, there are workarounds to comply w/Jewish law.

Jan. 15 2009 01:55 PM
joy brighton

Why aren't you talking about all the Muslims fighting against Shariah law in Indonesia, Turkey, Egypt, Jordan?

Shariah Law is highly oppressive to Muslims themselves. Highly oppressive. Only 15 - 25% of Muslims want to live under Shariah Law.

Muslims believe in the faith of Islam....this is very different than belief in are mixing up the two!!! Banks are tripping over themselves because there is $1trillion of oil money in the Middle East...but some of this money is demanding to be Shariah based.

Why isn't your expert addressing this issue?

Jan. 15 2009 01:54 PM
joy brighton

Shariah Islamic banking does allow for debt, speculation, hedging options absolutely. It is just constructed in a different way.

Muslims themselves in poll in UK...more than 3/4 do NOT believe in need for Shariah investments.

Carla...this is NOT full disclosure.. there is more to this story. I don't think this is intentional have fallen prey to the 1/2 billion dollar ad campaign out of Dubai to promoted this.

Jan. 15 2009 01:50 PM
joy brighton

If you look at the underlying structures of Islamic Banking..they are deriviatives. and more complicated, harder to value to hedge investment founded on a simpler investment. Changing interest flows to "rent" or Leasing" requires deriviative structures. We know the issue with derivatives..just look at sub-prime. Again the issue is what the reason for the creation of Shariah banking? who is promoting this product? Shariah Law is the law of the land in Saudi Arabia, Iran, Sudan, ...moral justice? Women are the property of men, homosexuals are killed, those who leave the faith of Islam are condemned. moral justice?

Jan. 15 2009 01:46 PM
Ashraf from Rockland County

Muslim so-called leaders are opposed to Shariah-compliant finance because they are "western educated" and they are afraid to lose control to the religious scholars. Islamic finance laws are not theoretical as they were used during the prime of Muslim empire quite successfully. Besides, they are part of the Muslim religion and they don't have to be used in non-Muslim countries. What I mean is, no one is forcing them down others' throats.

Jan. 15 2009 01:39 PM
joy brighton

Islamic Banking is interest-free in form only not substance. Because Shariah Scholars claim that “interest is usury” ( despite documentation that interest of up to 15% was perfectly acceptable during the golden years of the Ottoman Empire) , western investment Bankers have engineered a way for “interest payments” to become “rent” or “lease” payments. There is nothing illegal about this kind of financial engineering , otherwise known as “deriviatives”. The misconception is, however, that these “interest-free” investments will be less susceptible to market collapse than other investments. This is false. Note that as of 12-10-08, the DJIM ( Dow Jones Islamic Market Index) is -40.68%, while the Dow Jones Index ( non-Islamic) is – 35% and the S&P 500 index is -40%. You can see that Shariah Islamic investments have suffered in price as much as traditional western investments despite being “interest free”.

Jan. 15 2009 01:02 PM
Samir from Bay Ridge

1. Shariah Finance Watch
Exposing the Risks of Shariah Finance

As we start the second year of the Shariah Finance Watch website, the Center for Security Policy wishes to thank our readers and researchers for making this a useful public resource documenting the serious risks of Shariah Compliant Finance and Shariah Law. Please consider helping us inform the public about the possible civil and criminal liabilities and risks of Shariah Compliant Finance, and the threats to human rights of Shariah Law.

2. The Terror Finance Blog

The Terror Finance Blog was created to serve the needs of legislative staff, government officials, policy makers and researchers who need intelligent and relevant analysis of issues relating to terrorist financing. The contributing experts all have many years’ worth of experience in studying, documenting, and researching the ways in which terrorists fund their actvities and get away with it.

Jan. 15 2009 12:06 PM

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