Islamic finance and the credit crisis, Muslim group in Chicago helps Muslim convenience store owners

The President of the Islamic Development bank said that the global financial crisis has no influence on Islamic banks "because it was linked to debt operations [and] Islamic banks do not hold such [debt] obligations". While it is true that Islamic banks don't (can't) hold the debt products that led to the financial crisis, it is short-sighted to say that Islamic banks do not have exposure to the global financial crisis. One significant example of how it does have exposure was the Dubai World debt crisis which began with problems at Nakheel around the maturity of its sukuk. Sukuk are debt instruments (for the most part) and Islamic banks had exposure to this sukuk and also were faced with difficulty in raising capital during the financial crisis, despite not having any direct exposure to the subprime-based debt products. The Islamic Development Bank is staring a fund to finance affordable housing.

A Muslim group in Chicago is helping Muslim owners of convenience stores to move their businesses away from selling liquor and pork, among other products, by providing a source for fresh foods instead. The article describes the difficult choice that many Muslims who own convenience stores face: to remain in business, they must sell liquor and pork although they are generally uncomfortable about selling haram items. Instead, the grants will provide them with access to fresh foods that could allow them to remove liquor and pork products from their shelves without jeopardizing their businesses and also helping their communities. One of the well documented problems in low-income urban areas is the lack of grocery stores, which is blamed for causing health problems including obesity. The approach taken by the Council of Islamic Organizations of Greater Chicago is beneficial because it not only helps the business owners avoid selling haram products, but will provide their neighborhoods with fresh foods, which are sorely lacking. This seems like an area where Islamic finance could be able to contribute by providing the financing, which could be a good business opportunity as well as a way to educate Americans about Islamic finance.

Other News

• Rushdi Siddiqui discusses the difficulty (and importance) of finding alternatives to LIBOR for pricing Islamic finance products.
  
• A Jewish fund in the US provides another example of the growth in ethical-based finance.
  
• An Islamic fund in India has done surprisingly well at attracting non-Muslims as well as Muslims based on its performance. This is not a new trend. In the US, the Amana funds received significant investor interest from non-Muslims based on its strong performance.
  
• A court in the DIFC ordered the liquidation of Tabarak, the first Islamic financial firm to be liquidated by the DIFC.