A comparative analysis of Islamic home mortgage models in U.S. and Canada: A case for improvement of the Canadian model.

摘要

Shari'a compliant home mortgage replacement products (SCHMRP) are not a choice but compulsion for a large number of Muslims in North America, based on dictates of their faith. An equitable and affordable access to home mortgages necessitates, in their case, access and supply of SCHMRPs at competitive rates. This is a comparative study of two SCHMRP regimes in North America_US and Canada. The study explores the financial regulatory framework, ancillary laws and housing policies and identifies different stages of growth in both jurisdictions. The study reveals a general similarity and accommodation in treatment of SCHMRPs in the financial regulatory regimes of both jurisdictions but significant variation in reinvestment and disclosure laws which indirectly help SCHMRPs in the US attracting a significantly higher level of investments than Canada. Finally, the study makes a host of recommendations both on equitable grounds and economic specificity of the product in transactional cost theory terms ranging from allowing a standalone Islamic Bank to some regulation of the too self-regulated financial sector of Canada with significant transparency concerns related to its mortgage lending sector. The study surveys the North American SCHMRP market and sees evidence of recent progress and future potential in the Canadian market which is on the threshold of a real take off if certain bottlenecks are removed.