DollarShadow

The decline of the auto industry has everyone from politicians to journalists proclaiming the need for diversification and a new look for the Michigan economy. While this may be easy to talk about, there are few tangible ideas as to how this may take form, or which industries it could involve. It would be almost impossible to offer a comprehensive plan, but my suggestion is Islamic Banking. It is a booming industry that is poised to expand outside of its traditional areas of operation.

Islamic banking is founded upon a rejection of interest based financial transactions. In addition to a ban on charging interest, Islamic banks can be distinguished from conventional banks in that they are prohibited from investing in activities that have contributed to the recent credit crisis. As a result, they have fared far better in the current global recession than their more traditional counterparts.

The Islamic banking industry has grown at a rate of 15% per year. The value of the assets managed by these banks is predicted to have grown by 33% between 2007 and the beginning of this year. As of 2008, there were 300 Islamic banks and investment firms spread over 75 countries managing almost a trillion dollars in capital. Despite these trends, the United States has yet to take advantage of is an industry with tremendous potential.

As of 2009, there are 1.82 billion Muslims in the world—the market for Islamic banking is quite large. Recognizing the potential of this opportunity, other nations have begun to promote Islamic Banking. England offers car insurance, mortgages, and credit cards that comply with Islamic law, putting it far ahead of the United States. As other financial hubs continue to nurture the growth of Islamic Banking, the U.S. could lose a portion of its stake in the global financial market. The U.S. needs to take advantage of the Muslim market.

Michigan is in the unique position to become the hub of Islamic banking in the United States. It has the largest Arab population in the world outside of the Middle East. About 300,000 people of Arabic descent live in southeast Michigan. Dearborn alone is home to 30,000 Arab-Americans, the largest proportion for a city its size in the country. It is also home to the Islamic Center of America, the largest mosque in the country.

The Arab-American population in Michigan puts it at a distinct advantage for welcoming Islamic Banking to the US when compared to the rest of the country and even many other parts of the world. This idea is both regionally specific and unique. Looking around and taking what is being done elsewhere in order to invigorate Michigan’s economy is ineffective. Those opportunities have already been recognized. We need to consider the resources that we have and how they can be used in new ways. Islamic banking is one way. What are the others?

Anthony Mianecki is a senior at Michigan State University and the Director of Media and Technology for Spotlight Michigan, a student-run company that focuses on creating young, talented, and entrepreneurial communities for the new economy. For more articles like this one, visit www.spotlightmichigan.com