Islamic finance popularity set to soar

Popularity increase for Islamic finance

29 September 2008

Given the current volatile state of the financial markets, BDO Stoy Hayward predicts an increase in those investing in Islamic banking and Shariah-compliant products.

Islamic banks are one of the few financial institutions that still have significant sums of money available to finance individuals, unlike their Western banking counterparts that will only continue to constrict lending policies in light of the current economic crisis.

Dan Taylor, head of banking at BDO Stoy Hayward, says, ‘As the risk profile of Islamic banks is generally lower than conventional Western banks, this presents a more solid option for investors and suggests that dealings with Islamic financial institutions will grow dramatically as people switch to more secure products in this environment.

‘Further growth of Islamic banking in the UK will also be attributed to their more conservative approach to financing, as the risks are shared with the investor, much like the private-equity model. In addition, it is more difficult for Islamic financial institutions to use leverage; therefore their risk profile is naturally lower.’

 

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