FA readers sceptical of Islamic finance

Two-thirds of our readers question whether Islamic finance offers a real alternative to conventional finance.
Saudi Arabians check out the latest stock market movements.
Saudi Arabians check out the latest stock market movements.

Islamic financial products have grown in popularity during the past few years, but respondents to our web poll last week are not convinced that they are a real alternative to conventional financial products.

The basic idea of Islamic finance is to create a fundamentally different relationship between moneylenders and borrowers, in accordance with Islam’s prohibition on usury. The main concept is that Islamic lenders share risk in a much fairer way than straightforward moneylenders, who simply charge interest based on their perception of the risk involved.

If that were true, one would expect to find that Islamic banks are more risky than conventional banks -- their very existence dictating that they offer a...

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