And they account for 42 per cent of the workforce and 40 per cent of the Emirate’s GDPNovember 24, 2015 4:32
Islamic finance 2.0, regulation 1.0
Trading in Shariah-compliant products is about to enter a new age. But as the controversy over the Nakheel sukuk illustrated, the industry is still mired by a lack of transparency.
February 16, 2010 9:22 by Ben Flanagan
You wouldn’t expect someone like Dr. Hussein Hamid Hassan, who is known as the ‘father of Islamic finance’, to speak favorably about conventional banking practices.
As president of the world’s first Shariah consultancy firm, and the chairman or board member of countless banks and institutions, Hassan has made a living advising on Islamic finance, the $1 trillion sector that was, for a while at least, considered immune to the financial woes of the West.
“Interest is a crime against humanity,” Hassan declared on the sidelines of today’s launch of the Thomson Reuters ‘Islamic Finance Gateway’, which provides users with information of “unparalleled depth and coverage”.
A ban on interest payments, and an insistence that investments are tied to tangible assets, is one of the key tenets of Islamic – or ‘Shariah-compliant’ – finance, along with a ban on ‘haram’ industries such as those dealing in pork products, pornography, gambling and alcohol.
Hassan points to the subprime crisis in the US, in which many people lost their homes, as evidence that variable interest charges are damaging to society. He also points his finger at short selling – in which investors hope to profit from a decline in the price of assets – as being another practice, banned under Shariah law, that contributed to the recession. “It is a mafia,” he says of the conventional finance world.
And so, does Hassan believe that the Islamic finance model should completely replace the conventional model? “We would like this, but don’t expect it,” he admits. “We need to replace these capital systems… Humanity is trying to find a financial system to remedy – if not replace – the current financial system.”
There is one blindingly obvious counterargument to Hassan’s assertions: Do Nakheel’s bondholders agree with him? And the answer is: probably not.