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Islamic Finance Can Solve Global Crisis

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peacemaker View Drop Down
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Joined: 29 December 2005
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    Posted: 06 May 2008 at 10:53am
Islamic Finance Can Solve Global Crisis, Says Scholar
Mahmood Rafique, Arab News
 

MANAMA, 24 April 2008 — While the global economic system rattled by the US subprime mortgage crisis, a distinguished speaker has said that ‘Islamic finance model’ is the only answer to this persistent economic turmoil.

Dr Mohammed Mahmud Awan, a leading scholar and Dean at Malaysia-based International Center for Education in Islamic Finance (INCEIF), told the participants of a conference in Manama that the current global economic crisis has opened many windows of opportunities for Islamic finance.

“This crisis is seen as a big opportunity for Islamic finance as it has the capacity and capability to bring stability to the market.”

The current global crisis which caused colossal financial loses running in billions of dollars, he said, would have not occurred if the Islamic principles regarding collateralized debt obligations (CDOs) were in vogue in the international financial market.

“Islamic bonds, carrying unique structure features, cannot fall foul of a crisis such as subprime mortgage crisis. Subprime mortgages are backed by dubiously rated collateralized debt packages which subsequently precipitated a global credit crunch.”

Awan, who was a keynote speaker at the two-day conference on globalization organized by the University of Bahrain recently, said that it was the right time for Islamic banking industry to present solutions to the global economic community in the wake of the crisis.

The conference was attended by over 300 delegates representing various countries who share their expertise with a specific thrust globalization and opportunities and challenges.

Awan said: “Subprime mortgages are backed by dubiously rated collateralized debt packages which subsequently precipitated a global credit crunch

He added: “A crisis such as the mortgage one would technically be unthinkable in the Islamic capital markets sector because it would be against Shariah principles to sell a debt against a debt.”

There is a very simple rule in Islamic trade, he said, which clearly says that you can’t sell unless you posses.

He said: “In the present crisis we have seen trillions of dollars trading without backing of assets. If such transactions followed the Islamic finance model it would have easily prevented the current economic crisis.”

Then which of the favours of your Lord will ye deny?
Qur'an 55:13
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aimim.in View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote aimim.in Quote  Post ReplyReply Direct Link To This Post Posted: 05 June 2009 at 6:10am
Excellent article there brother.
Most of the people except those living in UK and Mid-East are not aware of Islamic finance, we should help them in creating awareness Inshallah.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote kristi.gill Quote  Post ReplyReply Direct Link To This Post Posted: 08 October 2010 at 4:13am
While Islamic finance derivatives are under consideration for coverage and risk management, some wonder how the Islamic finance industry should go in terms of convergence with the mainstream financial markets and if the convergence is desirable, given the current problems in traditional markets.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote marryroy02 Quote  Post ReplyReply Direct Link To This Post Posted: 17 October 2010 at 10:08pm
This crisis is seen as a great opportunity for Islamic finance as it has the ability and capacity to bring stability to fulfill market.Islamic on the unique structure features can not conflict with a crisis like the subprime crisis. Subprime mortgages "are supported by dubious rated collateralized debt packages which subsequently caused a global credit crisis.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Altius Quote  Post ReplyReply Direct Link To This Post Posted: 24 April 2011 at 10:55pm
Hi nice forum.. I would like to share this page here which gives good topics on Finance and Finance related fields..Please check the below link hope it will be informative and helpful.

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