THE fast growing syariah financial system may receive a further boost as an alternative to capitalism amid the credit crunch and banking crisis, Islamic academics and clerics believe.
Already said to be worth US$300 billion and expanding at 15 per cent a year, the Islamic system forbids the levying or payment of interest, preferring shared ownership and splitting of profits.
The global economic meltdown shows "the need for a radical and structural reform of the global financial system. The system based on the principles of Islam offers an alternative which could reduce risks," said Hatem al-Naqrashawi, head of theological studies at Doha University.
"Islamic banks don't buy credit but manage concrete assets ... which shelters them from the difficulties that American and European banks are experiencing," explained Abdel Bassat al-Shibi, managing director of Qatar International Islamic Bank.Islamic finance is different from capitalism in two main ways. It bans interest-bearing loans, seen as usury, a practice forbidden by Islam, and also forbids speculation. Instead, it favours sharing risks and profits between a bank and a client.
In the past three decades, the number of Islamic financial institutions has risen above 300, spread among 75 countries. Their total assets are more than US$300 billion and are growing an at average rate of 15 per cent a year, according to studies.
"The collapse of capitalism based on usury and paper and not on the trading of goods on the market is proof that it is in crisis and shows the Islamic economic philosophy is holding up," said prominent cleric Sheikh Yussef al-Qaradawi.AFP
Already said to be worth US$300 billion and expanding at 15 per cent a year, the Islamic system forbids the levying or payment of interest, preferring shared ownership and splitting of profits.
The global economic meltdown shows "the need for a radical and structural reform of the global financial system. The system based on the principles of Islam offers an alternative which could reduce risks," said Hatem al-Naqrashawi, head of theological studies at Doha University.
"Islamic banks don't buy credit but manage concrete assets ... which shelters them from the difficulties that American and European banks are experiencing," explained Abdel Bassat al-Shibi, managing director of Qatar International Islamic Bank.Islamic finance is different from capitalism in two main ways. It bans interest-bearing loans, seen as usury, a practice forbidden by Islam, and also forbids speculation. Instead, it favours sharing risks and profits between a bank and a client.
In the past three decades, the number of Islamic financial institutions has risen above 300, spread among 75 countries. Their total assets are more than US$300 billion and are growing an at average rate of 15 per cent a year, according to studies.
"The collapse of capitalism based on usury and paper and not on the trading of goods on the market is proof that it is in crisis and shows the Islamic economic philosophy is holding up," said prominent cleric Sheikh Yussef al-Qaradawi.AFP
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