Islamic, or sharia-compliant, finance could benefit from the UK's current economic downturn, according to financial consultants BDO Stoy Hayward. The principles that underpin Islamic finance will make it more attractive to potential investors as banks are increasingly being forced to make cutbacks.
Islamic finance commonly operates on a risk-sharing model and prohibits usury. As a result more money is available to borrowers and the amount of money owed at any one time is lower than many mainstream lenders.
Head of banking at BDO Stoy Hayward explains:
"As the risk profile of Islamic Banks is generally lower than conventional western banks, this presents a more solid option for both retail and institutional 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...it is more difficult for Islamic financial institutions to use leverage; therefore their risk profile is naturally lower."
Good post mate!! Keep 'em flowing!