Resurgence Of Islamic Finance

Islamic finance is experiencing a resurgence in the Arab world as a result of the economic recession, according to Alex MacGillivray, senior partner at AccountAbility, one of the co-authors of a new report entitled Responsible Competitiveness in the Arab World 2009.

There’s a new buzz in the Arab world about Islamic finance, which tended to have a reputation of being “nice” yet offering “lower returns”, he says.

Today, argues MacGillivray, Islamic finance is being viewed as a safer and better bet for investors than the “Western casino style” of financial investment.

“It’s not just steady - it’s outperformed a lot of Western banks and therefore the sort of idea that Arabic versions of financial management were kind of dozy but required for good Muslims - that preconceived notion has been disproved. So the essays in the report from financial houses Abraaj and National Commercial Bank are quite ‘gung ho’ about the role Islamic finance can play, and about the role the Arabic version of corporate governance can play.”

“So where many Western investors would have said a year ago, ‘well governance is a bit lacking and they are a bit risk adverse compared to Western finance’ - you won’t hear that now.”

“And put that together with Saudi Arabia joining the G20 as an active player in global leadership and you see quite a different image coming out of the Arab world. They want to be part of the solution.”

From Insead