Islamic Banking and Finance: Historical Perspective and Future Prospects: Economistan

Islamic banking and finance had its major beginnings in the year 1975 with the establishment of the Islamic Development Bank. Islamic banking has flourished in various countries since then with Malaysia, Indonesia, UAE, Pakistan and Saudi Arabia being in the forefront. Islamic banking has also recently done rather well in non-Muslim countries with the reported size of UK Islamic banking overtaking that of majority Muslim countries like Pakistan. Islamic banking assets are thought to be anywhere from 700 billion dollars to 900 billion dollars as of 2009. The credit crunch that has affected much of the western world has not taken its toll on the Islamic Banks, mainly because of the nature of the underlying transactions which admonish Riba and encourage instead a partnership based approach. The result is that the actual profit or loss is shared with the shareholders rather than an arbitrary number called Riba or “interest” which they have to come up with to please the investors regardless of the market situation. In this way, Islamic Banking also helps in depicting the true state of the economy.

Islamic indices historically have also been outperforming the other indices with the Dow Jones Islamic Developed World Index outperforming the MSCI World Index consistently over the past few years. Growth in Islamic banking has also been stellar and it has been growing at a healthy rate of 15-20% per year according to estimates. Moody’s has projected that Islamic banking would expand to a total value of $4 trillion dollars in another five years. The reason to this growth can also be attributed to the western banks taking interest in the Islamic banking instruments. Lloyd’s bank in the UK spread Islamic instruments to all of its two thousand branches in 2006 from five branches a year earlier. HSBC, Standard Chartered and Citigroup are some of the conventional western banks which have invested in Islamic banking.

Islamic bonds called Sukuk have been....

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Muslim investors profit by adhering to faith: San Francisco Chronicle

Matthai Kuruvila

As credit markets have imploded, triggering a global economic crisis, Islamically correct investors have seen a change of fortune: The conservative principles this small group of devout Muslims clung to during the economic heyday has insulated them from the worst of the past year's suffering.

Their renunciation of the interest-based economy kept them away from investments in financial services companies, whose stocks have collapsed, and out of traditional mortgages.

"There was a time two or three years ago that Islamic finance was considered simply too conservative," said Professor Ibrahim Warde, author of "Islamic Finance in the Global Economy" and an adjunct professor at the Fletcher School of Law and Diplomacy at Tufts University. "Right now, many people are recognizing that maybe it wasn't such a bad thing."

Dow Jones Islamic Market Indexes, which represent benchmarks for Islamically correct investment categories, have been outperforming their non-Islamically compliant counterparts by 3 to 4 percent in key indexes. The two Amana Income and Growth funds, the largest Islamic mutual funds in the country with $1.2 billion in combined assets, have been outperforming the S&P 500 in the past year by 13 and 7 percent, respectively. (Both Amana funds also outperform the S&P index on 5- and 10-year comparisons.)

Bay Area residents who bought homes through an Islamically compliant lender in San Jose, the Ameen Housing Cooperative, don't have to worry whether their lender will work with them if they lose their jobs. Islamic lenders are required to work in good faith with distressed borrowers to figure out ways to make payments manageable - and co-op leaders say they will.

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Can Muslims provide solutions to the Current Economic Crisis?: Islamicity

By: Dr. Aslam Abdullah
IslamiCity* -

America Muslims cannot sit on sidelines talking only about foreign policy related issues. We must play a role in coming up with ideas to help the economy.

The Quran requires Muslims to be part of any change that promotes justice, equality, liberty and rule of law for every creation of God anywhere in the world.

The Quran instructs the believers to cooperate in things that are virtuous and lead to the fulfillment of the covenant with God and to avoid things that promote repression, aggression and things that result in undesirable consequences (Quran 5:2).

Can Muslim Americans offer something new to the nation that will help it overcome its worsening economic crisis and reassure the world that America is a nation that caters to justice and equality of all?

Muslim Americans have ample intellectual resources to make an attempt in this direction if they assume the much needed responsibility of the hour. With many intellectuals, educationists, economists, religious scholars and social activists, a debate within the Muslim community can be initiated to welcome and promote ideas that would result in concrete proposals for the betterment of the nation as a whole.

Muslims claim that the Quran offers guidelines to use human and material resources for the betterment of all. What are those guidelines and how can those guidelines can be given a concrete form and shape?

Muslim American organizations and Muslim intellectuals ought to offer relevant ideas to ensure that they play an active part in the economic recovery process.

Economists alone cannot find an answer to all the fiscal woes that the nation has at present. Economists can help to manage and utilize resources in an efficient and professional manner, yet the economists also need directions to move forward avoiding stagnation in their own ideas.

Can Muslim intellectuals offer some alternative ideas to utilize the natural resources in an affective manner and suggest ways and means to increase the circulation of money in such a way that it is distributed justly among people rather than being controlled and monopolized by a few?

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Advice of the Prophet: Islamicity

Companion of Prophet Muhammad , Khalid ibn El Waleed narrated the following:

A Bedouin came one day to the Prophet and said to him, "O, Messenger of God! I've come to ask you a few questions about the affairs of this life and the Hereafter. "

The Prophet responded Ask what you wish.

I'd like to be the most learned of men.

Fear God, and you will be the most learned of men.

I wish to be the richest man in the world.

Be contented, and you will be the richest man in the world.

I'd like to be the most just man.

Desire for others what you desire for yourself, and you will be the most just of men.

I want to be the best of men.

Do good to others and you will be the best of men.

I wish to be the most favored by God.

Engage much in God's praise, and you will be most favored by Him.

I'd like to complete my faith.

If you have good manners you will complete your faith.

I wish to be among those who do good.

Adore God as if you see Him. If you don't see Him, Know that He sees you. In this way you will be among those who do good.

I wish to be obedient to God.

If you observe God's commands you will be obedient.

I'd like to be free from all sins.

Bathe yourself from impurity and you will be free from all sins.

I'd like to be raised on the Day of Judgment in the light.

Don't wrong yourself or any other creature, and you will be raised on the Day of Judgment in the light.

I'd like God to bestow His mercy on me.

If you have mercy on yourself and on others, God will grant you mercy on the Day of Judgment.

I'd like my sins to be very few.

If you seek the forgiveness of God as much as you can, your sins will be very few.

I'd like to be the most honorable man.

If you do not complain to any fellow creature, you will be the most honorable of men.

I'd like to be the strongest of men.

If you put your trust in God, you will be the strongest of men.

I'd like to enlarge my provision.

If you keep yourself pure, God will enlarge your provision.

I'd like to be loved by God and His messenger.

If you love what God and His messenger love, you will be among their beloved ones.

I wish to be safe from God's wrath on the Day of Judgment.

If you do not lose your temper with any of your fellow creatures, you will be safe from the wrath of God on the Day of Judgment.

I'd like my prayers to be responded.

If you avoid forbidden actions your prayers will be responded.

I'd like God not to disgrace me on the Day of Judgment.

If you guard your chastity, God will not disgrace you on the Day of Judgment.

I'd like God to provide me with a protective covering on the Day of Judgment.

Do not uncover your fellow peoples faults, and God will provide you with a covering protection on the Day of Judgment.

What will save me from sins?

Tears, humility and illness.

What are the best deeds in the eyes of God?

Gentle manners, modesty and patience.

What are the worst evils in the eyes of God?

Hot temper and miserliness.

What alleviates the wrath of God in this life and in the Hereafter?

Concealed charity and kindness to relatives.

What extinguishes hell's fires on the Day of Judgment?

Patience in adversity and misfortunes.

Imam El Mustaghfiri said: "I have never heard a tradition more comprehensive of the beauties of religion, and more beneficial than this hadith. It collects all the good things of Islam but not put to use." (Related by Imam Ibn Hambal)

Article taken from Islamicity.com, for a link to this article, please click on the following link: Advice of the Prophet: Islamicity