Islamic finance has enjoyed ever-widening acceptance in the West, with fresh examples appearing almost daily: Banks are pitching Shari'a-compliant investments, insurance policies, and mortgages. Dow Jones manages a tracking index for Islamic bonds, while Britain aims to become the first Western government to issue them. Envious of London's reputation as a global center for this class of banking, New York recently hosted two major conferences in the hope of increasing its share of the spoils.
Now DePaul University has developed a course on Islamic finance:
The growth prompted DePaul last fall to join a tiny vanguard of U.S. colleges offering classes or lectures on the subject. On Thursday [March 13], the university will sponsor a conference on Islamic banking methods including home financing, private equity, bonds, even derivatives and hedge funds.
"There is a significant demand clicking up for people who understand the field and can design products that are Islamic and can answer the needs of the community," said Ali Fatemi, chair of DePaul's finance department, who was instrumental in bringing the Islamic banking course to campus.
So what exactly does Islamic finance mean? Broadly speaking, the term refers to a range of financial apparatuses that accommodate the Koran's prohibition on interest. However, critics argue that the field is actually a modern construct designed to promote Islamist political and social agendas. Daniel Pipes explains:
The idea was primarily the brainchild of an Islamist intellectual, Abul-Ala Mawdudi (1903-79), for whom Islamic economics served as a mechanism to achieve many goals: to minimize relations with non-Muslims, strengthen the collective sense of Muslim identity, extend Islam into a new area of human activity, and modernize without Westernizing.
Timur Kuran provides this rather blunt assessment in Islam and Mammon: it "has promoted the spread of antimodern … currents of thought all across the Islamic world. It has also fostered an environment conducive to Islamist militancy."
And that is why Wall Street's enthusiasm should be a concern. Does Islamic finance represent yet another Trojan horse carrying elements of Shari'a law to the West? Will such funds "purify" themselves through the traditional tithing, or zakat, transferring countless millions to Muslim charities that often support radicalism and terror?
There are plenty of reasons to be bearish about the influence of Islamic finance. But will DePaul University students hear about them in Shari'a Economics 101? Don't bank on it.