Despite proving more resilient to the financial crisis than conventional markets, Islamic finance is struggling to reach its full potential, a conference has heard.
Experts gathered in Lucerne last week agreed that much work still has to be done to bridge the gap between the fledgling Islamic financial sector and Western markets. One Swiss expert said the terms Islamic and sharia were hindering the process.
Until recently, there did not appear to be a particularly compelling case for Islamic banking and insurance services for non-Muslim clients. But the out-performance of Islamic products against conventional markets during the financial crash has generated more interest.(more)
“The failure of toxic products [including mortgage-backed securities] during the financial crisis has allowed Islamic finance to gain momentum,” Marc Chesney of Zurich University’s Swiss Banking Institute told the conference on Friday.
But Fares Mourad, head of Islamic finance at the Swiss bank Sarasin, pointed out that the marketing of this product has so far won few converts in the Western world. “The terms ‘Islamic’ and ‘sharia’ have helped it develop and reach this stage, but it is now hindering the next stage of reaching Western clients,” he told swissinfo.ch.
Recent moves to ban minarets in Switzerland or the wearing of religious headscarves in France, hardly point to a climate willing to accept a form of finance based on Islamic sharia law, the conference heard.
In addition, the introduction of Islamic finance would also require an overhaul of tax laws and regulations.