The Global Financial Crisis
Complete 14 pages APA formatted article: The Global Financial Crisis and Its Affect on Islamic Banks in the USA. The United States has at least 19 providers of Islamic financial services (Shayesteh, 2009). These range from retail and investment banks to finance providers and mortgage companies. Their number is low as compared to the number of Muslims residing in the US but their services are on the rise.The Sub-prime mortgage crises are an ongoing crisis. which started in the United States. characterized by evaporating liquidity in the worlds credit markets. declining asset prices especially in the housing sector. high rate of foreclosures on mortgage assets. failure of mortgage-backed securities. etc. Although the crises started in the United States (US) its effects have been contagious and have extended to other financial markets around the globe.The crises took everyone by a storm forcing liquidity, reducing credit supplies, reduced asset growth and ratings. There are proofs to suggest that Islamic banks and conventional banks have been affected in different ways. (Maher Hasan, 2010)Their credit and asset growth were better and they got more favorable external ratings than conventional banks. Their business model limited the adverse effect on profitability. Nevertheless, Islamic financial institutions like all other financial institutions were affected by the crises though the impact on Islamic banking was lower.The US is home to religious freedom and therefore Islamic finance is allowed to flourish. Islamic finance includes Shariah-compliant ways of providing loans, mortgages, credit, insurance and almost everything that conventional banks provide. The only difference is in the terms, conditions, underlying beliefs and laws that form the foundation for Islamic finance. They generally do not invest in toxic investments and therefore the impact of the crises was relatively low. This industry has weathered the crises and the effects will be analyzed by looking at the financial statements and the external credit ratings given to banks. .