Islamic finance in the United States: A small but growing industry

The demand for and the availability of financial products for Muslims who adhere to prohibitions against receiving and paying interest is explored. This is an evolving area and the goal of this article to provide an overview of the potential market for Islamic finance, to describe the organizations...

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Bibliographic Details
Published in:Chicago Fed Letter 2005-05 (214), p.1
Main Authors: Chiu, Shirley, Newberger, Robin, Paulson, Anna
Format: Article
Language:English
Subjects:
Banks
Demand
Financial institutions
Immigrants
Islamic financing
Muslims
Noncitizens
Product development
Regulation of financial institutions
Trends
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Summary:The demand for and the availability of financial products for Muslims who adhere to prohibitions against receiving and paying interest is explored. This is an evolving area and the goal of this article to provide an overview of the potential market for Islamic finance, to describe the organizations that currently provide these products, and to highlight some of the challenges of satisfying both religious tenets and government regulations. Drawing largely on interviews with regulators, practitioners, and experts in the field, it is found that the few financial entities that offer formal Islamic finance in the United States are often motivated by strong grassroots demand in their local service areas. Religiously observant Muslim families who previously thought they were unable to purchase a home are now able to become homeowners. The regulatory agencies are interested in building their knowledge in the area of Islamic finance.
ISSN:0895-0164
2163-3592