Could Islamic Banking help avert the financial crisis Essay

Could Islamic Banking help avert the financial crisis - Essay Example Also, the focus will be on the Islamic economy to bring out how such factors will bring stability that the world is in need of (In Ahmed, In Asutay & In Wilson, 2014). The world could be in the midst of financial crisis which puts a lot pressure on the world’s economic recession. Islamic credit brought a lot of worries and confusion in that period of 2007 when economic depression was experienced making United States’ markets to rupture. An experience of the economic crisis is very threatening in that it brings into a stand still all the economic development due to increased prosperity and employment especially in the western economies and more so this leads into too much loss in the world economy (Kettell, 2011). Examining this topic will help in the understanding and appreciating of the roles of banking in diverse backgrounds (Kim & McKenzie, 2010). This can help borrow some knowledge in terms of rules and regulation that govern the banking activities in Arabic countries which can then be implemented in our banks. For example, Islamic banking holds fast on the principles of Sharia Law in which it is characterized by prevention of interest application on the loans given, and more so limiting excessive financial speculation (In Ahmed, In Asutay & In Wilson, 2014).The study of this topic gives me an understanding of international finance in that it gives the major causes of financial crisis, it impacts and also its effects (El, 2011). The financial crisis of 2007 had two major effects to the United States. First is that banks were unwilling to give or lend money which in turn increased the prices of borrowing. For example, the bonds that had been issued against different mortgages turned down $1.9 billion, in just a year, to $500 million in the year 2008 (Venardos, 2010). Second is that very many financial institutions became devastated, especially in the private finance initiative industry, single-line insurers