Meet the New Bosses of the Lending World

By Sam Hopkins
Monday, October 20th, 2008

If you’ve been praying for the stock market to turn back to positive territory over the past several weeks, you’re probably part of the largest congregation in the world.

But economics and religion don’t just connect when recession looms. Many faiths prohibit one member of the community from charging interest to another. So where does that leave faith-based finance in the era of the credit crunch? You may be surprised…

A Look Into Islamic Finance

On the shores of the Persian Gulf, the emirate of Qatar sits atop the world’s #3 natural gas reserves. Qatar is the smallest oil producer in OPEC, but its location between Saudi Arabia and Iran makes the small monarchy hugely important.

Now, Qatar is turning into a financial force to be reckoned with. That’s because Islamic Shariah law, and its restrictions on how money can be invested, is gaining notice around the world as the safest way to save.

Bloomberg puts the case simply:

Shariah requires that investors profit only from transactions based on the exchange of assets, not money alone, so interest is banned. Bankers sell Islamic bonds, or sukuk, by using property and other assets to generate income equivalent to interest they would pay on conventional debt. The money can’t be used to finance gambling, guns or alcohol.

Qatar International Islamic Bank welcomed in billions more in the past year, logging a profit jump of 44%.

In the United Arab Emirates, Abu Dhabi Islamic Bank reported its quarterly results on Monday, just like any secular Wall Street firm would do…

But in a time when lending houses from Charlotte to Reykjavik are hemorrhaging debt, Abu Dhabi’s #2 bank just reported a year-on-year Q3 profit increase of 58%.

continue reading this article, with scpeticism at ….


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