Saturday, October 18, 2008

Islamic finance and the credit crunch

Islamic financial institutions are realizing that they're exposed to the credit crisis through their investments in the GCC real estate market which has begun to slow. The primary effect now is reduced profitability, but the lack of depositor insurance could allow falling real estate prices to feed through to depositors. In a few countries like Malaysia, the government has guaranteed all deposits even those at Islamic banks for two years. Islamic banks in Europe are also expected to see growth slow due to the credit crisis, according to the CEO of the European Islamic Investment Bank.

The editorial manager of Oxford Business Group in Abu Dhabi discusses the fallout from the AAOIFI ruling on sukuk and highlights the new, innovative products that are being developed.

Depositors in the UK have several alternatives to conventional banks, one of which is Islamic banks. A BBC news article discusses some of the opportunities and risks of Islamic finance.

In the U.S., Habitat for Humanity, a Christian charity, has built and refurbished many homes for Muslims and Muslims are now becoming involved in the organization.

Indonesia may delay its dollar-denominated sukuk because of credit market conditions.

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