Finance and Religion: Islamic Banking

I just had a fascinating financial discussion with my Muslim co-worker. According to her beliefs it is against her religion to earn interest. Interest is a form of usury, which is to say charging a fee for the use of money. The interest rate accrued on accounts can by that definition be considered money lending. Both the Bible and Q'uran condemn it in many passages.
I don't think many Christians, adhere to this philosophy. Certainly not in capitalist America. The economic ramifications of a no usury economy would be devastating. But it raises so many questions about personal finance for people who don't believe in usury. How does one plan for retirement? Because a diversified portfolio like a 401k may include savings accounts and stock in companies which profit from pork, alcohol and gambling -- that's probably out of the question.

Wikipedia has an interesting article about how Islamic Banks work and get around the problem of usury. For example instead of offering a mortgage loan, a bank would buy the property itself and sell it for a profit (and in installments) to the buyer.

Other moneylending practices emphasize shared risk between the borrower and lender so that it is more like a partnership. In one case a business loan interest rate is variable, based on the profits and success of the business.

Personal savings accounts don't offer interest but the bank, in gratitude, may offer a "gift".

Source: http://en.wikipedia.org/wiki/Islamic_banking

Side note: It's been tough maintaining two blogs, especially with my current workload so I'm going to cut back on the updates. Just add me to RSS and you won't miss anything.