Friday, February 05, 2010

Islamic banking in the crisis, Syrian microfinance

A report on Islamic banking from the Kipp Report provides a good, if brief, look at the impact of the credit crisis on Islamic banking. The most important statement, in my opinion, is a quote from the president of the Islamic Development Bank:
"But it’s becoming clear that Islamic finance’s conservatism did not fully shield it from the ills of the economic crisis. 'The word immune is inappropriate here,' the president of Jeddah-based Islamic Development Bank, Ahmed Muhammed Ali, says."

Syria, which passed a microfinance law in 2007, has seen microfinance institutions, both conventional and Islamic, struggle to find a sustainable business model. Most began not chargin interedt, although now most conventional microfinance institutions charge 1% per month and Islamic microfinance institutions charge markups of 5% (the time horizon for this financing is not provided, so the numbers are not directly comparable). As with all microfinance, in order to make it a part of a poverty-reduction strategy, it does need to integrate its focus on raising incomes, while at the same time making enough money on an institution level to make it self-sufficient.

Other News

New facilities

($4.7 bn)
($12.0 bn)
Issuance from new facilities
RM39.6 bn

($11.5 bn)
($2.6 bn)
($2.8 bn)

1 comment:

Azhar Nadeem said...

Very thoughtful.