native Mariam Khan never considered Islamic banking until her husband moved the
family to Dubai in 2007. But the 36-year-old housewife is a believer now as the
Western debt crisis deepens. Her husband opened a family account with HSBC
Amanah, the Islamic arm of international bank HSBC.
I look at the damage that an interest-based system has done to the US and
Europe, I can see why God forbids riba (interest) in Islam," she said.
"I'm not particularly conservative as a Muslim but I definitely feel safer
within Islamic banking."
It is a
sentiment that proponents of Islamic finance, which is based on religious
principles including bans on interest and pure monetary speculation, hope will
spur unprecedented growth of their industry as a safer, more stable alternative
to conventional finance.
central bank governor Rasheed Mohammed al-Maraj said last week that Islamic
finance had an opportunity to attract not only customers in its traditional
areas, the Gulf and Muslim parts of Asia, but also investors around the world
who had been hurt by the turmoil in mainstream capital markets.
should provide the industry with a sustained period of growth for the next
decade," he said.
Nazim, Islamic financial services leader at consultants Ernst & Young, said
the Occupy Wall Street movement in the United States showed mounting public
anger about inequality in the capitalist system. This could help Islamic
institutions gain market share by emphasizing Islam's preference for an
equitable distribution of wealth and dislike of excessive financial leverage,
still unclear, however, how much of the recent growth of Islamic finance is due
to its merits - and how much is simply due to a temporary flight from
conventional finance which could reverse when global markets eventually
assets estimated to total nearly $1 trillion globally, Islamic finance remains
tiny compared to conventional finance with its tens of trillions of dollars.
The market in Islamic bonds, or sukuk, is believed to total about $50bn,
roughly 1 percent of global bond issuance.
proponents of Islamic finance can point to impressive gains. Nazim said it had
expanded at a compound annual growth rate of 20 percent over the past three
years, compared to 9 percent for conventional finance. That performance gap has
probably widened further in the last two months as much new business in the
West has ground to a halt.
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