Expanding trade financing opportunities through islamic finance

Scott Schmith

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• Publié par: aie
• Nombre de lectures: 97
• Langue: Français

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Expanding Trade Financing Opportunities Through Islamic Finance By Scott Schmith The growth of alternative financial markets, Muslim countries and upward trends in Islam such as those that adhere to the principles ofic finance presents many opportunities for Islamic finance, provides substantial oppor both providers of Islamic finance and for U.S. tunities for U.S. exporters and financial instiexporters. tutions. Thispaper provides an overview of Islamic financial tools, trade trends with Mus Where are the markets? limmajority countries, and how U.S. finan cial institutions can use Islamic finance to in Islamic finance includes trade, deposits, leas crease U.S. exports. ing, real estate, and business lending and is concentrated in the Middle East and South What is Islamic finance? Asia but is spreading rapidly to other develop  ingand developed markets. The Gulf Cooper Islamic financial services are essentially fiation Council (GCC) states (Saudi Arabia, nancial services that comply with IslamicKuwait, the United Arab Emirates, Bahrain, principles on interest, nonIslamic investOman, and Qatar) account for almost 36 per ments, and speculation. Islamic financial sercent of the total market of $500 billion as vices apply Islamic teachings in the creationmeasured by the Banker. The nonGCC Mid of trade, savings, and credit instruments thatdle East and North Africa region (35 percent resemble the same instruments that are com mon in conventional finance. The biggest im pact for most financial institutions that use Islamiccompliant products is that their Islam ic compliant products are structured to avoid the payment of fixed interest through mark ups, leasing, and etcetera. How large is the market? According to the Islamic Financial Services Board, an industry body, Islamic assets under management stand at around $700 billion and are growing faster than conventional financial assets. Muslims account for around 21 percent of total world population, yet the economies Source:TheAmericanBanker of Muslim countries account for only 8 per cent of global GDP.Islamic finance, despite of the total), is dominated by Iran (not open to its rapid growth, currently represents only a U.S. investment), with Lebanon, Egypt and small portion of total financial products used Turkey acting at significantly lower levels. in countries with large Muslim populations. Asia represents 24 percent of the total and is The convergence of growing populations in ITA/MAS/Services/Office of Financial Services Industries1