Conclusion
Islamic Finance that started as a simple idea, turned out to
be a long-term viable industry. In fact, it adapted to the clients' needs
through the development of Shariah compliant instruments. The ruler of Islamic
finance is justice: the provider of capital and the client should participate
in sharing the risks of loss and profits. Interest, speculation and uncertainty
are not allowed. In order to put these principles into practice, some contracts
are used after being screened as conform to the Shariah.
Despite, the large numbers of critics, Islamic finance has
emerged as a «winner from the credit crunch». Less affected then its
opponents; Islamic finance is presented as the alternative or the solution to
the financial crisis. However, it is still a minor sector compared to the
larger more established financial world.
Furthermore, the problems within the Islamic finance
institution are too crucial to compete with conventional old banking
traditions.
To say the least, the multitude in the Shariah board opinions,
the conflict of interests, the non presence of a unified regulatory body, and
the absence of an interbank liquidity market are all major issues that the
Islamic finance industry still needs to sort out.
However, Islamic banks present some advantages that have
helped insulate them from the crisis, especially their more conservative
approach to lending and the widespread of justice principle.
The study of the causes of the crisis can be resumed in
excessive lending triggered by high leverage and cheap credit. The
«generate to distribute'' model was triggered by securitisations and
securitisation of securitisation.
This complexity of products led to mispricing and misrating of
debts by the rating agencies.
From a subprime mortgage crisis, the crisis turned into an
international financial crisis which led to systemic failure.
According to Gordon Brown «we saved the banks we saved
the world» but maybe if we learn from the Islamic financial world, we can
avoid some of the mistakes next round.
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2- Articles
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