INDONESIA - OPINION - Islamic banks do not capture the possibilities created by the US economic crisis

Jakarta (11 / 3). The global economic crisis as a result of economic recession the United States teryata not utilized directly by Islamic financial institutions particularly banks. At this time of financial recession that Indonesia will experience a flood of foreign funds that will go in Indonesia. Why Islamic banks can not take advantage of that opportunity?

Islamic economic experts, Adiwarman A Karim in the event together in `open-UI PSTTI Salemba - Jakarta, said that Islamic banking was unable to take advantage of these opportunities, this is because the concentration of Islamic banking is not chasing foreign funds but hunt domestic funds. (source)

FINANCE - Malaysian bankers push for Islamic finance to guide banking reforms

LONDON, Oct 8 — The push for reforms to the global financial sector after the recent crisis would gain from studying the principles of Islamic finance, according to leading bankers from Malaysia, the premier hub for this sector.

CIMB group chief executive Datuk Seri Nazir Razak (picture) and Bank Muamalat chairman Tan Sri Munir Majid spearheaded a panel discussion on Islamic banking at the World Muslim Leadership Forum that detailed how the principles of strict collateral, profit and risk-sharing and real economic activity that underpin Islamic financial transactions would help to bring in the required ethics and into conventional financing where sub-prime financing was seen as a leading cause of the global collapse of the last three years.

ARTICLES - IMF - The Effects of the Global Crisis on Islamic and Conventional Banks: A Comparative Study

Summary: This paper examines the performance of Islamic banks (IBs) and conventional banks (CBs) during the recent global crisis by looking at the impact of the crisis on profitability, credit and asset growth, and external ratings in a group of countries where the two types of banks have significant market share.

Our analysis suggests that IBs have been affected differently than CBs. Factors related to IBs‘ business model helped limit the adverse impact on profitability in 2008, while weaknesses in risk management practices in some IBs led to a larger decline in profitability in 2009 compared to CBs. IBs‘ credit and asset growth performed better than did that of CBs in 2008-09, contributing to financial and economic stability. External rating agencies‘ re-assessment of IBs‘ risk was generally more favorable.