A thriving financial sector sounds like an oxymoron these days. Even Australia's banks - among the most profitable in the world - kept a fifth of this week's interest rate cut to cushion their margins. But there is one sector that has tongues wagging in the hubs of commerce: Islamic finance.
While the Western world's financial system has been imploding, this small but rapidly growing share of world capital has weathered the storm.
Sharemarkets in London and New York are a third off their peaks. Dow Jones's Islamic financials index, in contrast, rose 4.75 per cent in the most recent September quarter and lost a modest 7 per cent in the previous year.
Not only has the industry been resilient; it's also on the cusp of serious expansion. It is growing faster than any other subset of world banking, at 15 to 20 per cent a year. The Economist estimates Islamic assets under management are worth $US700 billion ($1000 billion). This figure could hit $US1 trillion - about the Australian sharemarket's current value - by 2010.
What's more, all this growth has come from a model of lending that rejects interest payments and shuns speculation and heavy borrowing.
In short, Islamic finance bans some of the excess that has brought the West's financial system to its knees, and is looking wise indeed, or at least lucky.
While the Western world's financial system has been imploding, this small but rapidly growing share of world capital has weathered the storm.
Sharemarkets in London and New York are a third off their peaks. Dow Jones's Islamic financials index, in contrast, rose 4.75 per cent in the most recent September quarter and lost a modest 7 per cent in the previous year.
Not only has the industry been resilient; it's also on the cusp of serious expansion. It is growing faster than any other subset of world banking, at 15 to 20 per cent a year. The Economist estimates Islamic assets under management are worth $US700 billion ($1000 billion). This figure could hit $US1 trillion - about the Australian sharemarket's current value - by 2010.
What's more, all this growth has come from a model of lending that rejects interest payments and shuns speculation and heavy borrowing.
In short, Islamic finance bans some of the excess that has brought the West's financial system to its knees, and is looking wise indeed, or at least lucky.
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