{"id":22976,"date":"2016-01-12T14:57:50","date_gmt":"2016-01-12T20:57:50","guid":{"rendered":"http:\/\/news.medill.northwestern.edu\/chicago\/?p=22976"},"modified":"2016-01-13T09:34:02","modified_gmt":"2016-01-13T15:34:02","slug":"how-muslims-in-the-u-s-follow-the-islamic-financial-system","status":"publish","type":"post","link":"https:\/\/news.medill.northwestern.edu\/chicago\/how-muslims-in-the-u-s-follow-the-islamic-financial-system\/","title":{"rendered":"How Muslims in the U.S. Follow the Islamic Financial System"},"content":{"rendered":"

By Nikita Mandhani<\/strong><\/p>\n

At the entrance of the Devon Bank in Chicago is a small pathway with a billboard that includes \u201cFaith-Based Financing\u201d as one of its options to direct customers toward Islamic alternatives for buying a home.<\/p>\n

The Islamic financial system, which is based on the principle of interest-free transactions, risk-sharing partnerships and altruistic donations, is central to the financial practices of several million Muslims throughout the world.<\/p>\n

Thousands of Muslims in Chicago use the Islamic finance system, based on Shariah or Islamic law, while also using traditional banks and conventional financing structures.<\/p>\n

According to the Institute of Islamic Banking and Insurance (IIBI) based in London, \u201cthe Islamic system places equal emphasis on the ethical, moral, social and religious dimensions, to enhance equality and fairness.\u201d\u00a0It says that the conventional financial system, by contrast, focuses principally on \u201cthe economic and financial aspects of transactions.\u201d
\n<\/p>\n

Cynthia Shawamareh, Islamic law and finance lecturer at the University of Chicago, described how Muslims in the U.S. find it more challenging to follow faith-based financing.<\/p>\n

\u201cI think it is the toughest when you are working in two different systems at the same time,\u201d she said. \u201cIf all of the shops shut down at prayer time in a particular city, you\u2019re likely to go and pray. But in the western world, it seems more difficult.\u201d<\/p>\n

Some Muslims in the U.S. obey the Shariah-based financial system with different workarounds to process their economic operations under the purview of Islamic finance while still operating in mainstream American financial systems.<\/p>\n

\u201cWe are not supposed to use the money that comes out of interest,\u201d said Bina Habibi, an Indian-American Muslim living in Oak Park. <\/p>\n

Habibi doesn\u2019t follow Islamic finance stringently but ensures that a fixed percentage of her family income goes for charity as it \u201cdistributes wealth.\u201d<\/p>\n

For Seyed Fowad Motahari, a 24-year-old Iranian student at Washington University in St. Louis, the validity of the Islamic financial system is a looming question particularly when people in America have the freedom to defy it.<\/p>\n

\u201cAs an individual, I put my money in the checking account so that I don\u2019t get any interest on my deposit,\u201d said Motahari.<\/p>\n

The Devon Bank initiated a Shariah-based financing alternative for its Chicago customers in 2003, creating a system of residential mortgage and commercial leasing options that are Shariah-compliant.<\/p>\n

There has been an exponential growth in the Islamic finance branch of the bank since then, according to Badih Alkhatib, senior loan officer of Devon Bank\u2019s Islamic finance division.<\/p>\n

\u201cHome financing is one of our major components,\u201d he said. \u201cWe have murabaha, which in Arabic means \u2018sales with deferred payment.\u2019 \u201d<\/p>\n

Under this system, the bank purchases the property and then signs a \u201csales contract\u201d with the client wherein the amount is a sum of the bank\u2019s expenditure and its profit.<\/p>\n

\u201cIn conventional banks, they sign a debt contract which is not allowed in Islamic finance,\u201d Alkhatib explained.<\/p>\n

\"A
A private Islamic home financing firm in Chicago (Nikita Mandhani\/Medill)<\/figcaption><\/figure>\n

According to the World Bank website, worldwide Islamic finance has a 10 to 12 percent annual growth rate. Currently, Shariah-compliant financial assets worldwide are estimated at roughly $2 trillion, covering \u201cbank and non-bank financial institutions, capital markets, money markets and insurance.\u201d<\/p>\n

The key industry players in the modern Islamic finance industry are the practitioners of this system, Shariah scholars who determine whether a structure is actually Shariah-complaint, lawyers and government regulators, explained Shawamareh in a lecture on the subject at the American Islamic College on Nov. 10.<\/p>\n

Whether a product is Shariah-compliant or not depends on the different schools of thought based on a variety of \u201chuman interpretations\u201d of the Shariah, as noted on the Institute of Islamic Banking and Insurance website.<\/p>\n

\u201cIslamic finance falls under what\u2019s also known as affinity marketing,\u201d said Rizwan Kadir, president of the Pakistan Club at the University of Chicago, asserting that a lot of Shariah-based instruments are offered with the goal of attracting more customers. \u201cThere is nothing un-Islamic about it but there\u2019s nothing Islamic about it either.\u201d<\/p>\n

Shawamareh pointed out that it is \u201ca question for consumers\u201d and including practicing Muslims to decide for themselves. \u201cIf they think that a product accords with Islam, they will buy it.\u201d<\/p>\n

Photo at top: Devon Bank offers Islamic home financing alternatives to its customers (Nikita Mandhani\/Medill)<\/div>\n","protected":false},"excerpt":{"rendered":"

By Nikita Mandhani At the entrance of the Devon Bank in Chicago is a small pathway with a billboard that includes \u201cFaith-Based Financing\u201d as one of its options to direct customers toward Islamic alternatives for buying a home. The Islamic financial system, which is based on the principle of interest-free transactions, risk-sharing partnerships and altruistic […]<\/p>\n","protected":false},"author":191,"featured_media":23000,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27,509,28],"tags":[],"class_list":["post-22976","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-fall-2015","category-general-interest"],"yoast_head":"\nHow Muslims in the U.S. Follow the Islamic Financial System - Medill Reports Chicago<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/news.medill.northwestern.edu\/chicago\/how-muslims-in-the-u-s-follow-the-islamic-financial-system\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How Muslims in the U.S. Follow the Islamic Financial System - Medill Reports Chicago\" \/>\n<meta property=\"og:description\" content=\"By Nikita Mandhani At the entrance of the Devon Bank in Chicago is a small pathway with a billboard that includes \u201cFaith-Based Financing\u201d as one of its options to direct customers toward Islamic alternatives for buying a home. 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