1. Why do you think banks in the United States have been slow to offer financing expressly for Muslims?
2. Do you think it is fair to offer one minority group a special banking opportunity?
3. How does ethnocentrism come into play in this case?
4. How does in-group collectivism relate to Central Bank's finance plans?
Central Bank is a small savings and loan institution that competes with 16 other institutions for customers. It recently conducted a financial needs survey of those that live in their area. The survey revealed that Muslims represented 8% of the population. However, few, if any Muslims banked at Central Bank. Upon further investigation, the bank learned that principles of Islamic finance forbid paying or receiving interest. Under Islamic law, money is only a medium of exchange and should not be used to make more money.
In order to attract Muslim customers, the bank decided to offer two new types of mortgage financing, which essentially has the bank purchasing the home and leasing it to the customer, or selling the home to the individual at an agreed-upon markup rate that allowed the customer to make installments payments. Both of these plans were consistent with Islamic beliefs, because money was used to buy something tangible but not used to make more money. The banks new plans grew quite popular in time, but some expressed disapproval because the plans targeted a specific Muslim population.