The rise of Islamic banking and the details the promoters leave out
The article illustrates that the promoters of Shariah-Compliant Finance are not simply interested in making such products available to Muslims. They want to attract the assets of non-Muslims as well. The article fails to mention 3 major threats to Shariah-Compliant Finance:
1. Failure to disclose the true nature of Shariah, which is of particular significance to the post-9/11 investor.
2. Failure to disclose the destination of zakat and purification funds.
3. Failure to disclose the backgrounds, writings and beliefs of Shariah Scholars who advise financial institutions
Since the summer of 2007, the global financial system has undergone a period of dramatic turbulence, which has caused a widespread reassessment of risk in both developed and emerging economies. The global financial turbulence appears to have had a limited impact on the Islamic finance industry, which has been in an expansionary phase in recent years.
This rapid growth has been fuelled not only by surging demand for Sharia’ah compliant products from Muslim financiers but also by investors around the world, rendering the expansion of Islamic finance a global phenomenon. In fact, there is currently over $800 billion worth of deposits and investments lodged in Islamic banks, mutual funds, insurance schemes (known as takaful) and Islamic branches of conventional banks.
Besides its wide geographical scope, the expansion of Islamic finance has been also taking place across the whole spectrum of financial activities, ranging from retail banking to insurance and capital market investments. But perhaps the most striking has been the growth of sukuk, the most popular form of securitised credit finance within Islamic finance. Sukuk commoditise capital gains from bilateral risk sharing between borrowers and lenders in shari’ah-compliant finance contracts into marketable securities without interest rate charges.