Banking on Islamic Banks

Islamic finance is an ancient concept, but it has only recently developed into a modern day institution.  Adhering  to the Muslim religious law of Sharia, it has prohibitions against charging interest and investing in morally dubious industries, such as alcohol, gambling, and pornography; furthermore all lending is based on profit-sharing.

Under Shariah, hoarding is frowned upon, so savings earn no return unless put to productive use. Rasheed Mohammed al-Maraj, governor of the central bank in Bahrain explains that “money cannot generate money – money should be used for creating better value in the country or the economy.” For some Muslims, conventional mortgages are regarded as sinful; under Shariah both the lender and the borrower share the risk of the investment.  The Islamic home mortgage functions by adding what would have been the monthly interest into the purchase price of a home. Most commonly, the bank actually buys the house at a qualified customer’s direction, and then sells it to that customer through monthly installments modeled on the payments of a 30-year mortgage. If the borrower loses his job and defaults on the payments, under Sharia it is very difficult for the family to be thrown out of their home, as that would be seen as a creditor exploiting a debtor. For any transaction, borrowers must possess underlying assets, an idea primarily driven by the rationale in Islamic law that borrowers do not over-borrow.  Under Islamic finance, the lender is also an investor, so he remains an active participant through the life of the transaction and is in a position to rectify mistakes before any situation occurs. Continue reading

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Sec-u-lar-ism (n.) –Separation of church and state

– How Prime Minister Erdogan’s revised interpretation of secularism has reignited the debate on the role of religion in Turkey

Prime Minister Recep-Tayyip Erdogan

As the world watched the 20th become the 21st century 11 years ago, the Turkish government strived to reach new levels with their economy and achieve relevancy on the global scale.  Recep-Tayyip Erdogan, former mayor of Istanbul, and current Prime Minister of Turkey was at the forefront of an economic charge that an Islamic nation had yet to achieve.  Once he took the helm of the Turkish government in 2003, Erdogan started to implement a number of reforms that, while difficult to achieve, propelled Turkey into a global economic success.  However, during this time of national economic success, the country has become divided in their support of Erdogan’s view of religion and its role in society. Continue reading