The Daily Dinar

Austrolabe have published a great article about the state of Islamic finance in Australia and some of the opportunities it represents (and challenges). It’s written by Ozrisk, who is an expert on banking and finance, and is well worth a read.

In the longer term, some of the Shariah-compliant products may also appeal to non-Muslim borrowers. The sharing of risks inherent in many of these products is likely to appeal to borrowers uncertain of the future. A Mudharaba mortgage, for example, may be appealing to a person uncertain of the direction of real estate prices.

Australia has approximately 300,000 Muslims according to recent census data. Is that enough to sustain a competitive and creative Islamic finance industry? Probably not and that’s perhaps one reason why, as the article points out, there are only two Islamic finance institutions in the entire country. Therefore, maybe the adoption of Islamic products by non-Muslims shouldn’t be the long term goal but rather the short-term objective of any new product offering. There will be features of some products — such as the certainty of real cost provided by a murabahah contract — that would appeal to the cross-section of society. It’s not necessary for these products to even be marketed as Islamic products at all.