Since the dawn of this millennium, the Islamic banking sector in the United States has been witnessing steady growth. The last sixteen years has witnessed rapid growth in the numbers of neighborhood banks in the US Midwest, brokerage firms and investment banks with presence all over the United States.
Growth in the sector comes with increases in financial capital. According to data we’ve been tracking, capital for the Islamic banking sector grew a whopping 1500% in the last 16 years, from $200 billion (USD) in 2000 to almost $3trillion (USD) in 2016. The sector is expected to add another trillion within the next five years. The global Accounting firm Ernest & Young estimates that Islamic banking will grow by 19.7% through to 2018.
Growth in the sector is mainly attributed to robust economies in the Muslim world due to increases in oil prices. However, experts believe that the major driving force for the sector comes from steering away from risky investments in economic bubbles-a major principle of Sharia compliant Islamic banking. Islamic banking particularly bars Muslims from making risky investments, thus saving them from investing in economic bubbles.
More than 25 institutions in the US offer some form of Islamic banking. Elsewhere around the world, Standard & Chattered Bank entered into the foray of Islamic banking with its signature Islamic banking division “Saadiq”. Through its Saadiq division, the bank is becoming a contender as the global leader in the provision of Islamic banking in Arab and Muslim countries.
The LARIBA Bank of Whittier, Los Angeles-The Case of A success story
The LARIBA Bank (LARIBA is Arabic meaning NO INTEREST) is located in the city of Whittier in Southern California with a population of about 86,000. The bank which was just a neighbourhood outfit 14 years ago has today mushroomed into a viable Islamic bank providing business trade capital as well as residential and commercial real estate financing. With a customer base from all the 3 major religions, the banks assets have grown 300% to $10.6 million. LARIBA Bank has been applauded for supporting the community and local immigrant entrepreneurs. It even boasts of local churches and synagogues in its client list.
Challenges Facing the Sector
The road to glory has not been all rosy. Since September 11, the Islamic banking sector has been under constant scrutiny largely due to unsubstantiated accusations that Islamic banks fund terrorism, a charge many US government investigations proved false. But in an era immediately after the September 11 hijacking when Bill O’Riley of Fox News dominated Cable News, so much hate and speculation was directed at the Islamic banking sector.
Today the sector has largely proved that it has no ties to terrorism. And in cities such as Whittier with a 64.6% white majority, Islamic banking is not only attracting the Muslim faithful, but Christian and Jewish customers as well. The fact that usury and speculation are non-existent in Islamic banking is perhaps what is enticing many non Muslim Americans to the sector. The truth shall always triumph over falsehood!
Written by Mamudou Jallow