International Herald Tribune- Even as banking segments like securitizing subprime mortgages and financing leveraged buyouts suffer from the current crisis, Islamic finance is seeing spectaculargrowth.
Islamic law, or Shariah, prohibits the payment and receipt of interest, stressing profit sharing instead. It also bans investment in businesses like tobacco, alcohol and gambling.
Over the past year, Shariah-compliant assets have grown almost 30 percent, to over $500.5 billion, according to analysis of the industry on a global scale, published this month by The Banker with input from a business consultancy, Maris Strategies.
That growth outstrips most other business segments in financial services and looks set to continue as banks – including Western banks like Standard Chartered and Goldman Sachs – feed increasing demand from the world’s 1.6 billion Muslims.
A major factor in the boom has been the high price of oil leading to increased wealth in the Gulf Cooperation Council states and Iran, among others. In addition, countries like the United Arab Emirates, Saudi Arabia and Malaysia aim to broaden government revenues and create jobs by making their capitals centers for Islamic finance.
