With many global markets showing first signs of emerging from the worst of the crisis, North America could be set to witness a surge in Islamic finance activity and may become its next growth market, according to a new report.

'Islamic Finance in North America 2009' published by Yasaar Media and co-published by Codexa Capital, UM Financial Group, King & Spalding, and Doha Islamic, explores for the first time the true depth of penetration of Islamic finance in both the US and Canada and concludes that both core North American markets could be set for a boom.

As world economies struggle to move from recession to recovery, Islamic finance is being hailed as a possible alternative to risk-prone conventional financial services – even in the capitalist heartlands of the US and Canada, the report said.

According to the report, Islamic finance in North America has developed along two quite separate paths.

The first path focuses on retail Islamic finance and centres mostly on home financing products and credit cards. The second path involves a number of high profile GCC-based Islamic investment banks and their deployment of hundreds of millions of dollars in private equity and real estate developments in North America, it said.

With many global markets showing the first signs of emerging from the worst of the financial crisis, North America could be set to witness a surge in Islamic finance activity along both paths as institutions and individuals look for alternative financing propositions that shun the use of excessive risk.

The significant inroads that Islamic finance has made in both the USA and Canada look set to be expanded upon in the years ahead, the report added.

Paul McNamara, editorial director of Yasaar Media, pointed out that investors and businesses alike were still smarting from the worst ravages of the global recession and they were looking for a lower-risk alternative.

'Islamic financing structures are inherently more risk averse than their conventional counterparts and as a result such structures are now being studied closely in all sorts of markets – including highly sophisticated markets like those of North America,' he noted.

These important markets are examined for the first time as growth areas for Islamic finance.

‘Both the US and Canada are home to some very experienced Islamic finance firms – both on the financial and the legal side – and many market observers are now watching closely to see how they will help accelerate development of Shariah financing in North America,' McNamara stated.

'These are lucrative markets and it makes sense that GCC- and Malaysia-based Islamic finance houses are watching them with great interest,' he added.-TradeArabia News Service