Sharia’a finance
By Primal Sneeze ~ May 31st, 2008. Filed under: Banks, Religion.
The folks at the Islamic Cultural Centre of Ireland ran a seminar on Sharia’a Law on finance for the folks from the Irish banking institutions. I can’t help thinking it was organised at the request of bankers. Face it - if there’s a buck to be made the banks will want to learn about it. Not that it matters - both the financial and Muslim communities stand to gain by working together.
When you don’t know about something, it’s best to go find out about it. I wasn’t invited to the do so I did some reading and talked to my neighbour instead. I now know my sukuk from my takaful.
There are a myriad of financial services and terms, and a long history to Islamic finance. While it is all very interesting it boils down to two core elements:
1. The Prophet taught that money has no intrinsic value. A Muslim cannot lend money to, or receive money from, someone and expect to gain. To make money from money is forbidden. Hence there can be no interest involved. To make money from trade or assets is fine - in these cases money is being used productively.
2. It is all bollix. Total and utter bollix.
I should clarify element 2.
Muslims, like everyone else, need finance. To buy a house, a car. To put the kids through school. Start a business. Whatever. But they can’t take out a loan as that would mean paying interest. Some Muslims have spare money and would like to put it to work. But they can’t make loans as that would mean receiving interest. See the problem?
The solution is simple. The party that needs a new car, costing say €20,000, does a deal with the party with the cash whereby Mr. Moneybags buys the car and Mr. Driver buys it from them over a number of years. At the end of that period Mr. Driver has paid Mr. Moneybags €23,000. This may be termed hire-purchase, but as that implies interest, it is called Ijara-wa-iktana.
Similarly Mr. Familyman could enter into an agreement with Mr. Moneybags whereby a house would be bought by the latter and bought over time by the former. The difference here is that ownership would be transferred gradually. This may be termed a mortgage but again that implies interest so it is called Ijara with diminishing Musharakra.
See why it’s all bollix? It’s just the same damn thing dressed up differently. That hot toddy you like before bed isn’t drinking if it’s for medicinal purposes isn’t it?
Those bankers attended a seminar to learn a bunch of new terminology. They’ll now go back to their offices, design a new set of brochures and tweak their IT systems a bit. And continue to sell the same loans. Plus ça change, plus c’est la même chose.
oh boy, please don’t get me started in the rotten islamic shite. from controlling women to money brokering with fancy arabic terms used to fool the fools.
it’s funny, don’t they say necessity is the mother of invention? of course the banks will go into financial arrangements in accordance to sharia’a law as there is influx of muslims in the country who have been brainwashed by the organised crime leaders - i.e. religion and religious leaders - on how to live their lives the islamic way. it’s the same way a butcher would put the sign “halal meat” on his shop window… it’s the fekkin same cow isn’t it? (sorry no offence to Seán Tarbh’s ladies) just murdered while an imam stands by and reads a prayer. ffs…
banks suck.
organised and legalised crime sucks more.
/rant off
Hola Primal, I was ranting so I didn’t notice my typos at the time. The Click to Edit thingo didn’t work so it will just stay as is I guess.
show window: shop window
I need to refrain from typing when smoke is coming out of my ears with rage.
(there is so much I can say about islam and the way it… ok… never mind)
Great post by the way.
Great post and an interesting read. I’m betting it took a ton of reading about the nitty gritty of things to gain the overview. Cheers for that.
I can’t decide whether the hypocrisy of the Sharia’a law or the banks shamelessness in pandering to it, is the least likable element of this story.
Gayé ~ I’ve fixed shop window for you. Perhaps you have Javascript disabled in your browser and that’s why the Edit thing didn’t work? Just a guess, though it’s a new release of the editing plug-in and there may be problems.
Anyway, back to Sharia’a finance: I hate this concept of “such and such is forbidden, but it’s okay if …”. It is prevalent in all religions (not just Islam) and in all societies.
While I may have more life-experience of Christianity than you, and you know more of Islam than I, I bet we could sit down for an hour and list a hundred examples from the other’s background. And a thousand from our own.
Sam ~ In reading about this, you pretty quickly you realise that every variant of Sharia’a finance has an equivalent in standard finance. They may not be an exact match, but close enough to be easily identifiable. That is not surprising when you consider that a system of mortgages, for example, varies from country to country, from bank to bank and even within banks. They are still mortgages.
Edit thing working for you, by the way?
At first I read it as “Sharia’s fiance” and thought oh no another feckin wedding…
This is only vaguely related, but there was an interesting article in yesterday’s Indo (yes I know this is generally a contradiction in terms) about rationality in relation to money and social norms. It posed the question - would you be more likely to nick a pencil from work or ten cents from the petty cash? Nearly everyone would consider nicking the cash worse, though it’s exactly the same thing materially. Same way, if someone turned up to dinner at your house brandishing a tenner because they didn’t know what wine you liked you’d think it a bit odd - I wouldn’t accept cash from a friend - though I would consider a bottle of wine appropriate. No difference materially, so I’m irrational too. I suppose the roundabout point is that cash is slightly taboo to us as well, unless you’re making your first holy communion or you’re Bertie Ahern.
Edit comments is working for me in Firefox by the way.
Edit comments OK for me too (Firefox)
Caro ~ That piece is interesting. Written by Professor Dan Ariely by an Indo hack I see. Did you take the test at the end, by the way?
Thankee very many, Sam.
Very interesting; thank you for laying it out so neatly.
In studying Judaism, I am by turns amused and annoyed to learn what workarounds there are for observant (~= Orthodox) Jews to live and still follow all the mitzvot (commandments - 613 if I rememer right, so the Top Ten are just the tip of the iceberg). An easy one: you’re not to do work during the Sabbath, and kindling fire is one kind of work. So no turning on electrical or gas appliances. Does this mean you spend Shabbat cursing the darkness? No, you have some options:
- turn on the lights before Shabbat starts and leave them on all night and the next day
- use a timer to do the work for you (seems a bit dishonest to me)
- hire a “Sabbath Goy” to turn on the lights for you. This is a non-Jewish person who is not bound by the same strictures. (Elvis Presley is supposed to have been a Sabbath Goy for some of his neighbors when he was a kid.)
I’m more comfortable with Reform Judaism’s approach to things, though I think there’s still a catch at the root of it all. Instead of vowing to follow every last commandment, going through torturous rationalizing to apply them to modern life, Reform says you can basically decide how observant you want to be and proceed. Of course, this means deciding at the outset that you are NOT going to follow all the commandments, which is an awkward point.
‘Nuff said. Thank you for illuminating Sharia finance.
Stwidgie ~ Still reading blogs while on holiday I see. Now there’s dedication/addiction [delete as applicable].
Since reading your comments I’ve been giggling to myself imagining a scene in a singles bar for followers of Reform Judaism where Ben, instead of asking Helen what music she likes, asks about her percentage observance.
Sorry, I must be having a Woody Allen moment.
Thanks Primal,
I can, ostrich like, agree with the prophet. I want to live in that world where we share and exchange stuff. As a species, we don’t invest half enough in exploring why this concept can’t work. I like the fact that the big J threw the traders out of the temple, and as I mentioned I like big M’s interest-free idea as well.
And please I have nothing against that shower of mercenary money grapping and re-possessing, no tangible value adding, corporate function attending, guiltless excessive carbon car driving, tie-wearing and robbing shower of fucking fuckers, the bankers.
Sniffly ~ Islamic finance is a large legged bird method of doing the same thing as that shower of mercenary money grabbing etc. etc. bankers.
The Prophet demanded the impossible. Barter cannot meet all the needs.
Not just the prophet
C.S. Lewis, Mere Christianity
http://www.philosophyforlife.com/mc13.htm
Aonghus ~ That they were only thinking of the private moneylender (the loan shark) is most likely, but vested interests (excuse the double pun) extended this.
Do no take blood, as in do not kill, became a ban on transfusions. And so on, and so on, and so on.
Well, as Lewis pointed out earlier in that chapter, a truly Christian society would be radically different, and probably wouldn’t have any vested interests.
I’m not sure that only private moneylenders should be cut out. The stockmarket and trading in derivatives of derivatives doesn’t seem to be contributing to a just and equal society.
But relabelling the same dodgy practices is not an improvement, I agree there.
So where are (many years on from Lewis’ talk) the Christian economists?