BYELINE: Turki Buyabes
WASHINGTON- Dr .Ghiyath Nakshbendi wants to take the concept of Islamic finance from the classroom and into the real world.
This growing global financial tool has not made its way into the United States, but Dr. Ghiyath Nakshbendi, an executive in residence at the Kogod School of Business at American University and an international businessman with over 35 years of experience in several Middle Eastern countries, is trying to change that.
Nakshbendi, an executive in residence at the Kogod School of Business at American University and an international businessman with over 35 years of experience, working in several Middle Eastern countries, is trying to change that.
What makes Islamic finance different from conventional financial methods is that it adheres to sharia islamic law, which prohibits interest rates and the relationship between the Islamic finance institution and the client, sometimes, is partnership. That is in addition, that Islamic Finance deal with productive and useful ventures (no gambling, pornography, for example are included in the list of ventures to be financed).
He currently is trying to form an advocacy group that will lobby for the implementation of Islamic finance in the United States. He began teaching a class on Islamic finance. Last fall, the first of its kind in the area, to educate students, on this growing concept. Now he wants to educate the country.
“I am trying to explain the foundations and the principles of the field, because the knowledge base is very limited here in the U.S. I use conferences, lectures, etc. to share my knowledge of the field to whomever is interested to listen. There is no such opposition, because, as I said, our knowledge in the U.S. about it is still limited,” He said.
Islamic finance is a growing concept in the business world, particularly in Europe and the Middle East as alternative form of financing.
Some of the common Islamic Finance concepts are prominently used around Europe and the Middle East.For example when a person tries to buy a house, the bank does not loan money to the individual; instead, it buys the property itself, this allows the customer the option to either buy it back from the bank at a higher price paid in installments, this concept is called murabaha literally meaning “winnings” or they can make monthly payments to the bank comprising both a repayment of the purchase price and rent until he owns the house completely, this is the concept ijara meaning “leasing” in Arabic.
Although Islamic Finance offers interest-free product and services, and puts an emphasis on institute-client relationship, there are still certain aspects to it that will make it hard for U.S. financial institutions to accept and integrate it into their economy. Dr. Nakshbendi explains that Islamic Finance is not perfect even with its specialized core concepts.
“There are definitely pros and cons to Islamic Finance, like any other financial tools. The pros are many including investing in ‘socially responsible businesses’ and avoiding charges that are not justified. The cons are it will take a long time to modify and make changes in our legal regulations (banking and taxation) to make it feasible.”
He does however see bright outlook for the growth of Islamic Finance in the United States.
“However I do not see it having any problems of it being accepted here and other countries, after people learn more about it and having institutions who are willing to offer such services. As it is prominently used in a few European capitals, like London and Paris who are working to expand the use of this alternative methods of financing. The more we learn about, the more, I think, will join forces to advance it in their economies. It just make sense. IF withstood the global financial crisis, is in that a strong testimony of its value and benefits!”