Shariah Companies may Resist Crisis

Islamic financial and insurance companies in the Gulf are more resistant to the global financial crisis than their “conventional” counterparts because Shariah law prohibits interest-based financial products, Standard & Poor’s said.

“Islamic financial institutions didn’t invest in the structured products that have hampered many conventional banks’ financial profiles and performance,” Mohamed Damak, credit analyst at S&P in Paris, wrote in a statement released on Saturday.

Most Islamic financial companies “should be equipped to weather the financial downturn.”

Takaful companies, which operate on the basis of mutual support or solidarity among Muslims to provide insurance, will be resilient to worsening credit markets because they have “sufficient liquidity flows” and capital, the report said

Source:Bloomberg