Islamic Finance 

Islamic Finance assets are expected to reach $3.8 trillion by 2022

| 06 February, 2018 | General
Islamic Finance assets are expected to reach $3.8 trillion by 2022
Jordanian Investors point to listed companies displayed on the newly inaugurated public video wall on the first day of operation of the high-tech investors gallery at the Amman Stock Exchange May 12, 2002. REUTERS/Ali

This article is an extract from the State of the Global Islamic Economy Report 2017/18.

The report can be downloaded from HERE.

Extract: The State of the Global Islamic Economy Report 2017/18

In monetary terms, Islamic Finance is the largest sector of the Islamic Economy. Long misunderstood and under-developed compared to the conventional financial sector, Islamic Finance has come into its own over the past decade, evolving and maturing year-on-year. Indeed, Islamic Finance players scoff at the notion that the sector is still in its nascency, rightly pointing out $2.2 trillion in assets and strong capitalization. This is a 10% increase from 2015, and assets are expected to grow by 9.4% CAGR to reach $3.8 trillion in 2022.

The sector’s Sharia-based foundations assert Islamic principles, which continue to attract new clients, both Muslims and non-Muslims, who are looking for more ethical ways to bank and finance projects. Pushing such development are governments encouraging Islamic Finance to bolster financial inclusion, notably the Reserve Bank of India in 2017 to better cater to the country’s 170 million Muslims.

OIC countries are increasingly using Islamic Finance to raise billions of dollars in funds, with Saudi Arabia issuing the first global sukuk worth $9 billion rated A+/stable by ratings agency Fitch, Tunisia preparing its debut sukuk issuance, and Nigeria to launch its maiden sovereign sukuk. Non-OIC governments are also utilizing the sector, such as the Government of Hong Kong listing a $1 billion sukuk on Nasdaq Dubai.

The sector continues to be dominated by Malaysia, the UAE and Bahrain, which have all retained the same top three spots as in previous indicator rankings. Strong regulatory frameworks have been accompanied by the broadening of existing standards and regulations, especially in the GCC countries, which are solidifying their position as Islamic Finance hubs. The UAE in particular is making a major push to be the center of the Islamic Economy, reflected in the world’s first Islamic trade finance bank to be established in Dubai.

One of the core strengths of Islamic Finance is its willingness to address global development needs and support SMEs, notably the Indonesian Financial Services Authority and the Islamic Development Bank launching new initiatives, and Malaysia launching a $100 million Islamic venture capital fund. Such moves are highly significant for countries with sizable Muslim populations such as Indonesia, Malaysia, Pakistan and India, where more than 50 percent of economic activity is generated by SMEs.

Bolstering the sector’s competitiveness and viability versus the conventional financial sector is the heightened adoption of digital banking and FinTech. Notable developments, achieved via crowdfunding campaigns, include the world’s first Sharia-compliant robo-advisory firm, and the first Sharia-compliant gold platform.

Meanwhile, Islamic insurance (Takaful) and other financial products such as Murabhahah and Waqf, continue to expand as new markets open up throughout the world.

SGIE 2017-2018_Islamic Finance assets are expected to reach $3.8 trillion by 2022

Read the full State of the Global Islamic Economy 2017/18 or visit GIEI Online Model 

State of the Global Islamic Economy 2017 Report_cover image

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Read the full State of the Global Islamic Economy 2017/18 or visit GIEI Online Model.