Oil Wealth Fueling Boom In Islamic Finance (Moody's via Research Recap)

I stumbled across Research Recap (which provides summaries of reports available for sale through its parent company, Alacra) a couple of weeks ago and have found it to be a very useful resource on matters of international finance.

Most of the reports, while interesting, don't have a direct impact on intelligence trends or issues but this recent summary on the rise of Islamic financing due to increased oil revenues I found particularly worth reading. Based on a $550 report from Moody's (who seems to cover the Islamic financing market fairly well), the author's of the summary highlight the massive increase -- to almost $35 billion in 2007 -- in "sukuk" bonds (or bonds that comply with Shari'ah law) mostly from Malaysia and the Gulf.

One of the primary benefits of this article, though, was to make me do some research on Islamic finance and banking in general. I didn't really know anything about it previously but a brief search led me to some fascinating results. The extent to which this system's importance is increasing makes it critical, in my mind, for understanding everything from the economies of Islamic countries to the options available for financing Islamic-oriented activities at any level. Basically, much of what you may have learned in a western economics class will not help you here. Wikipedia has a pretty rough primer on Islamic financing but the law firm Freshfields, Bruckhaus and Deringer has an excellent background paper on the basic principles and structures of Islamic finance (you can download the full text here).