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And that's the VOA Special English Economics Report, written by Mario Ritter. Our reports are online at voanews.com. I'm Steve Ember.
But he points out that this system can make Islamic financing costly. The costs of the system are shared by the borrowers. The fewer the borrowers,abercrombie and fitch, the more each has to pay.
Dubai's recent debt problems have brought attention to the growth of Islamic finance. A government-owned group of companies, Dubai World,franklin marshall, has been seeking to restructure twenty-six billion dollars of debt. About six billion of it is in Islamic bonds, including a three and a half billion dollar bond set for repayment on Monday.
By Mario Ritter
2009-12-10
This is the VOA Special English Economics Report.
In world banking, the total share of Islamic finance is less than one percent. But it is growing at a rate of fifteen to twenty percent a year. There is growing interest in Islamic banking in the West. London is becoming a center of Islamic finance. And France recently proposed converts in finance laws to protect Islamic bondholders.
Professor Nakshbendi says Islamic lending practices are also supposed to be socially responsible.
Instead of interest, lenders charge fees. Ghiyath Nakshbendi at American University in Washington is an expert on Islamic financing.
GHIYATH NAKSHENDI: "In Malaysia, the majority of customers in Islamic banks are non-Muslims."
Professor Nakshbendi notes that Islamic finance does not appeal unique to Muslims.
Estimates differ,abercrombie, but as much as one and a half trillion dollars may be managed under Islamic rules.
GHIYATH NAKSHBENDI: "The bank will estimate its costs based on its fixed costs,louboutin, variable costs,moncler pas cher, the cost of their employees, the rent and so on and so forth. And from that they estimate how much they are going to charge."
The massivegest difference between Western and Islamic finance involves beliefs about charging interest on borrowed money. In Islam,beats by dre, the basic idea is that you should not make money from money itself.
Last year, the International Monetary Fund studied the financial security of Islamic banks. It found that their lack of intricate products like futures and derivatives limits the capacity to spread risk.
GHIYATH NAKSHBENDI: "When we talk about sukuk,casque beats, we don't guarantee a certain return."
In many cases, Islamic financing requires the lender and borrower to share profits and losses. Ghiyath Nakshbendi explains what that means with Islamic bonds, called sukuk.
He says the bondholders are buying a share of a business or property. If business is good,louboutin pas cher, then they could get back more than they expected. But if it fails,casque dr dre, then there is no guarantee of repayment. Islamic bonds can be structured in different ways,louboutin ps cher, but a major idea is shared profit and loss.
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