Islamic Banking: What Financial Crisis?!

Interesting...as the global banking industry is caught in the grips of financial crisis and "stress tests", the good old Islamic banking industry is growing! Who'd have thunk it that the capitalistic models of finance across the world would be facing such a crisis while their islamic brothers would still be growing their institutions. Here's some of the details from the article over at Breitbart:

Islamic banking has escaped "relatively unscathed" from the global financial crisis and is expected to continue to grow this year even though at a slower pace, a key Islamic financial services official said Thursday.
"There are some signs that 2009 will be the year of slower growth but it should stay in positive territory," Muhammad Sulaiman Al-Jasser, chairman of the Council of the Islamic Financial Services Board, said on the opening day of a two-day conference organized by the board.

"It is a remarkable achievement in these difficult times that they have fared relatively well and escaped relatively unscathed," he said of the world's Islamic financial institutions.
Experts said the main reason is that Islamic banking is based more on equity and is less exposed to leverage and speculation than conventional banking.
"The model that was so disastrous to Western banking system recently is not applicable to Islamic finance," Al-Jasser said.

Okay, so you see by the excerpts that is all sounds pretty logical, yes? But let's take a look at one statement from the article:

In the past, it was an individual decision based on faith, now it is completely based on its own merits in the global marketplace," he said.

Hmmm.....so what this expert is saying is that the global marketplace has embraced islamic banking and is choosing it over any competitors. But he doesn't say that the "faith" part of the equation is determining of those global decisions. So I ask the question: as the spread of Islam grows exponentially across the globe, doesn't it stand to reason that newly converted and conquered markets would switch to Islamic banking? Let's look at Europe - as the muslim populations of Britain, France, Scandinavia soar, does it not stand to reason that the financial landscape of those countries will shift to Islamic banking just as every other part of the culture?

My point is that this growth in Islamic banking, in my view, has nothing to do with the "product" put out but simply are the spoils of conquest - whether that conquest is achieved by stealth immigration, terrorism or flat out conquest. Let's face it, if portions of a country are converted to sharia law, it certainly stands to reason that those same areas will see no one financial institutions surviving other than Islamic ones.

Islamic banking relatively 'unscathed' in financial crisis: official+

"Islamic finance has moved on to a new stage in the past few years. In the past, it was an individual decision based on faith, now it is completely based on its own merits in the global marketplace," he said.
Official statistics show that the industry grew about 28 percent last year, with the annual growth rate averaging at between 20 and 30 percent over the past 10 years. It is estimated that some 600 financial institutions in more than 40 countries manage total assets of over US$630 billion.
Speaking at the conference, Ahmad Mohamed Ali Al-Madani, president of the Islamic Development Bank, said the Islamic financial industry has shown relative resilience but must take precautionary measures to avoid the same pitfalls that have befallen the world's banking system.
"The trend in the past was to focus on regulating financial institutions individually, without sufficient attention to systemic risk and macro-level complications," he said.
"It is now widely agreed that this micro-level approach is not sufficient to maintain stability and minimize crashes," he said.
Heng Swee Keat, managing director of the Monetary Authority of Singapore, which has been promoting Islamic corporate banking in recent years, said he is confident Islamic finance will gain greater popularity after the current financial crisis is over.
"In the coming years, as the shariah principles of using capital to build productive capacity gain wider recognition, Islamic finance will assume a more prominent role" Heng said.
He said a growing number of countries in Asia are using Islamic finance to fund urban development and infrastructure projects.
Kim Jong Chang, governor of South Korea's Financial Supervisory Service, who also spoke at the conference, said South Korea "now has efforts underway to create conditions specially tailored for Islamic banking."
A rising number of South Korean financial institutions have shown interest in establishing investment funds compliant with Islamic rules or using Islamic financial instruments as an alternative mode of financing.