IslamicFinance.de

Since the global financial crisis started to unfold in 2008, there have been several reports suggesting that Islamic banks have been less affected by the crisis because they are not allowed for ethical reasons to invest in the pernicious derivatives such as CDOs (credit default obligations) that precipitated the worst crisis the world has seen since the Great Depression in the 1930s. Such reports have largely been based on oversimplified assumptions about Islamic finance and in a few instances on an emotional attachment based more on religiosity than on dispassionate non-descriptive empirical analysis. Now the International Monetary Fund (IMF) this month published a working paper titled "The Effects of the Global Crisis on Islamic and Conventional Banks: A Comparative Study" in which the authors Maher Hasan and Jemma Dridi conclude and confirm that in general Islamic banks fared better than conventional banks during the global financial crisis, although they warn that such comparisons are subject to a motley of caveats and should not be over-simplified.