Islamic Finance

I got the chance to attend this really cool panel discussion on Islamic Finance this past week and I think it’s definitely a topic worth hearing about. However, they used a lot of big/long words that I am so not familiar with, so I’ll try to dumb it down (for both of our benefits) in more common terms. Trust me, it’s for the best.

So basically, we have this new section of the finance world emerging that’s known as Islamic financing, because it follows sharia law. It’s most popular in Muslim countries, but as the world’s Muslim population grows and these countries become more powerful, this type of financing is beginning to grow as well.

Sharia law states that:

-all investments must have some kind of assets to back them up.

-you’re not allowed to make money from money, so banks can’t charge interest.

-no investments can occur in the industries of alcohol, gambling, tobacco, or pornography.

These rules limit the types of investments that people can make (if they’re trying to follow sharia law). Since this kind of financing is becoming bigger and bigger, it’s important that the world’s financial hubs (London, NYC, etc) take notice and comply with the growing trend. The UK is already on top of it, having just issued their own government “Sukuk” (which, if I understood correctly, was like a bond that complied with sharia rules), becoming the first non-Muslim country to do so. {more on that here: <http://www.aljazeera.com/indepth/features/2013/10/uk-aims-become-centre-islamic-finance-201310319840639385.html&gt;}

As London breaks into this new market (at least I think it’s a market? Like a financial market not like a normal market), the U.S. is standing by doin’ our own thing. One of the panelists said that if the U.S. continues to ignore this, NYC will no longer be the financial center it is now. If the U.S. wants to stay on the world map, they need to step it up. This is too big of a deal for us to not participate in.

Also, huge shout out to Drake University for bringing those awesome panelists for us in the first place! Such a blessing to attend a university where the undergraduates get the opportunity to learn new things like 24/7. I had never even heard about Islamic banking before Thursday, and I feel like now I could actually have an educated conversation about the benefits and downfalls. So sweet.

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One thought on “Islamic Finance

  1. Pingback: The Principal Financial Group Center for Global Citizenship | dat DU blue

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