An Overview of Islamic Finance

By Mumtaz Hussain, Asghar Shahmoradi, Rima A Turk

June 2, 2015

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Format: Chicago

Mumtaz Hussain, Asghar Shahmoradi, and Rima A Turk. An Overview of Islamic Finance, (USA: International Monetary Fund, 2015) accessed October 6, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Islamic finance has started to grow in international finance across the globe, with some concentration in few countries. Nearly 20 percent annual growth of Islamic finance in recent years seems to point to its resilience and broad appeal, partly owing to principles that govern Islamic financial activities, including equity, participation, and ownership. In theory, Islamic finance is resilient to shocks because of its emphasis on risk sharing, limits on excessive risk taking, and strong link to real activities. Empirical evidence on the stability of Islamic banks, however, is so far mixed. While these banks face similar risks as conventional banks do, they are also exposed to idiosyncratic risks, necessitating a tailoring of current risk management practices. The macroeconomic policy implications of the rapid expansion of Islamic finance are far reaching and need careful considerations.

Subject: Asset and liability management, Banking, Central Banks, Financial sector policy and analysis, Financial sector stability, Financial services, Islamic banking, Islamic finance, Liquidity management, Open market operations

Keywords: Assets data, Bank, Bank act, Bank management, Banking assets, Central bank certificate, Conventional bank, Equity capital, Financial sector stability, Financial Stability, Global, Islamic Banking, Islamic Finance, Liquidity management, Monetary policy, Open market operations, Profit share, Profit sharing, Profit-sharing financing, Rate of return, Shari'ah, Sukuk, WP

Publication Details

Pages:

35
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2015/120
Stock No:

WPIEA2015120
ISBN:

9781513590745
ISSN:

1018-5941

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