The Western system of finance, which emerged during the Renaissance,
is supplemented today with a new world-wide model, Islamic finance. Banker, a U.K. based trade publication, estimates that Islamic financial assets increased to US$500 billion. Although relatively small in worldwide financial terms, the amount far exceeds the $50 billion invested in U.S. companies by the four most financially active Muslim countries: the United Arab Emirates (UAE), Saudi Arabia, Singapore, and Kuwait. Perhaps more importantly, Islamic finance is expected to grow at about a 20% rate at least annually for the next few years.
The real impetus for growth, however, is that Middle Eastern financiers reacted negatively to Congress' nixing of DP World, the Dubai-based operative, which sought to manage U.S. ports. As a result, Islamic commerce emgerged, adhering to sharia, Islamic law based on the Koran. The restrictive measures of Islamic finance would prevent Islamic financiers from participating in typical Western banking practices, such as loaning money at interest. However, a team of sharia scholars issues rulings in order for Islamic finance to prosper.
Islamic profit is being invested. Arcapita Bank, based both in Bahrain and Atlanta, Ga, makes sharia compliant investments, primarily in the U.S.
They are not alone. Citigroup Inc. was one of the first Western banks to engage in Islamic finance. Since 1996 they have been operating in Bahrain. Most of the banks engaged in Islamic finance are in Europe but Citigroup is one of the few American banks to engage consistently in the practice.
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