An interesting article appeared on smh.com.au this week: Islamic finance rides the storm. This is not the first time I have read about the rapidly growing industry of Islamic finance, but in light of the world financial crisis that is unfolding, and the Islamic finance industry's resilience to the turbulence of plummeting world markets, perhaps this is a good time to peer outside our dominant capitalist model to see how else things could be done.
There are several relational elements of Islamic finance (pulled from the article) that are appealing, such as:
- the partnership between the lender and borrower is arranged such that the risk is shared, and therefore the lender does a better job at evaluating the risk before granting loans
- interest is not charged because it is considered immoral as it does not take into account how changes in the value of the loan's security can affect the borrower
- the short sale of shares is not permitted because it stops traders profiting from assets they don't own
- depositor know their money will not be invested in unethical industries
Readers who know more about financial markets and systems - any reflections in light of the credit crunch would be most appreciated. As would anyone who knows of examples of alternative, and perhaps Christian motivated, financing arrangements?
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Andrew and I have quite a few chats about the issue of loans. I have serious concerns about usury, both from a Bilical perspective (ie, Psa 15:5, Eze 18:7-9), and from the perspective of Church history - up until only fairly recently, usury was forbidden (in theory at least) within the Church.
I have recently taken out a $17,000 loan for a car with a financial institution set up by my denomination, Baptist Investment and Finance (www.bif.com.au). BIF is about Churches that are well-off but incapacited for significant mission being able to invest in more adventurous but empoverished ministries.
Say there's a Church made up of affluent, older debilitated people. They bank their money with BIF. BIF loans that money to a bunch of people starting a mission in a poor suburb, or (in my case) to a youth pastor who needs a car to move kids from here to there during activities.
The money is loaned with interest, but this is primarily to pay for administrative costs. The deposits also receive interest, because not all the money goes into loans, but also goes into more conventional investments. BIF have explained to me (with a tinge of regret) that there are more Christians wanting to be conservative and save their money, than there are ones keen to risk for mission.
BIF's set-up creates a new source of opportunity for Christians who are willing to risk. It's also more relational.
I have other ideas I've talked to Andrew about regarding possibilities for financing a home loan without interest, but we'll leave that for now.
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