Islamic finance ‘would have prevented credit crunch’
UK entrepreneur James Caan has the strong oppinion that the global financial crisis could have been avoided if banks had submitted the Islamic rules that forbid investment in collateralised debt obligations and other toxic assets.
Sharia-compliant banks advanced better than conventional lenders during the downturn, thanks to rules that forbid speculation. Banks are also discouraged from repackaging debts, as financial instruments generally have to sell for face value.
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