December 16, 2008

CNN: Islamic Finance Faring Well

I saw this video yesterday on CNN International, and was impressed by it. The story is a brief overview on Islamic banking and sukuk bonds, and suggests that the Islamic finance sector is doing better in the current economic climate than traditional financing. CNN even asks the question, Could Islamic banking be the answer to the current economic downturn? (Of course, this is not the first time I've suggested this on this blog.)

The video also expands a little bit further on the basic principles of Islamic banking, providing an answer to the recent odd story out of Bloomsberg. As I pointed out last week, there's more to Islamic banking than just no interest; we're not all going to become Islamic bankers anytime soon, insha'allah.

Islamic Banking - Basic Principles
  • Interest is prohibited
  • Any capital has to be invested
  • Lender has a stake in the business deal
  • Lender shares losses as well as profits
  • Capital used to buy assets can be held as collateral
  • No lending on speculation or promises
  • Business contract must be transparent

  • Asset-backed Islamic bonds
  • Bond holders share the profits earned

    Embedded video from CNN Video
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