Islamic banking continues to ramp up

MONEY & BUSINESS: "Capitalism That Crosses Cultures: Will U.S. Firms embrace Islamic investment rules?" by Kit R. Roane, U.S. News & World Report, 8 January 2007, p. 48.

I wrote about Islamic banking in Pentagon's New Map (or maybe it was BFA), citing it as a good and obvious beginning of economic connectivity between Islamic countries (specifically, Indonesia).

It has always amazed me that Arab oil money really doesn't connect well with the rest of the world, as historically speaking they've kept their investments pretty liquid (not engaging much or accepting much foreign direct investment, for example).

But all this oil money--this time--seems different. As Yusuf Talal DeLorenzo, the new "chief sharia officer" for a Connecticut money fund, is quoted in this piece:

Companies that do business in the Middle East are realizing that Islamic finance is not just a flash in the pan but is a regional and generational development.

Yes, getting Islamic financing is still harder than it should be, but wait until the next global credit crunch comes, and we'll see this connectivity take off.

Comments

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Two interesting trends have influenced this:--The pressure to limit hawala has encouraged banks in majority Islamic countries to become more competitive--A small team of mostly Brit expats with long experience in the Gulf have been unsnarling some of the more feckless banking practices, something you won't see in the paper (bad for business, you know).

I don't know if the people with much money are becoming less liquid in their holdings; my sense is that the older folks with lots of money tended culturally to hide it under the mattress, as it were, rather than put it to work. But I don't have experience in this observation, this is just RUMINT.