Islamic Finance, Islamic Banking, Islamic Bonds

 

To be sure, there is an Islamic way. Without a doubt, it is different from how the rest of the world does things, especially with regards to finance, banking and bonds.

For starters, they have what is called a Sukuk. A Sukuk is a sharia-compliant bond with a fixed rate of profit. Islamic bonds grew in popularity after the 2008 financial crisis. Saudi Arabia raised $9 billion with its first international Sukuk.

As for Islamic banking and finance, check out its unique characteristics listed below.

1
Charging interest or fees for loans is forbidden under Islamic law.

2
Banks make money by sharing the risk of investments instead of earning interest.

3
Islamic banks buy assets with customers’ money and then share profits with them.

4
Investments must be in real assets like property or businesses.

5
Banks can’t invest in firms linked to tobacco, alcohol or gambling.

Investors outside the Islamic world are getting interested in Sukuks, as well as in Islamic banking and Islamic finance.

Find out more in this very educational video from the World Economic Forum.

 

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