June 4, 2011 Leave a comment
This website is intended to be a one stop shop for all things pertaining to Islamic finance. The website primarily deals with Sharia compliant investing by compiling lists of companies which are compatible with Islamic law. You will also find articles on companies and model portfolios.
The major difference between conventional investing and Islamic investing is the prohibition in the use of “interest” and excessive debt in Islamic investing. In fact, interest is not allowed in all monotheist religions (See Exodus 22:25, Leviticus 25:35-36, Deuteronomy 23:20, Psalms 15:5, Proverbs 28:8, Nehemiah 5:7 and Ezakhiel 18:8,13,17 & 22:12).
To determine whether a company is Sharia compliant, the following screens are used (based on Dow Jones Islamic Market Indexes):
- Total debt divided by average market capitalization should be less than 33%
- The sum of a company’s cash and interest-bearing securities divided by market capitalization should be less than 33%
- Accounts receivables divided by market capitalization should be less than 33%
- The primary business of the company should not be of one of the following:
- Pork-related products
- Conventional financial services
- Weapons and defense