Islamic Finance: Opportunities, Challenges, and Policy Options
Staff Discussion Notes, April 6, 2015
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Bibliographic details
- Authors: Alfred Kammer, Mohamed Norat, Marco A. Piñón-Farah, Ananthakrishnan Prasad, Christopher M Towe, Zeine Zeidane
- Published: April 6, 2015
- Series: Staff Discussion Notes
- DOI: https://doi.org/10.5089/9781498325035.006
Overview
- Staff Discussion Note (SDN) that discusses the main policy issues and challenges in building an inclusive and safe Islamic finance industry, with emphasis on Islamic banking and Sukuk markets.
- Focuses on why Islamic finance matters, its recent and prospective growth, and its potential contributions.
- Covers regulatory and supervisory issues, safety nets and resolution frameworks, access to finance, Sukuk markets, and macroeconomic policies.
Why Islamic finance matters
- Discusses recent and prospective growth of Islamic finance.
- Emphasizes potential contributions in terms of:
- financial inclusion,
- support for small- and medium-sized enterprises,
- investment in public infrastructure,
- and, in principle, reduced systemic risk.
Main findings and challenges
- Identifies a range of regulatory and other challenges that hamper development of the industry and the delivery of its potential benefits.
- Highlights issues specific to:
- Islamic banking and Islamic banking supervision,
- Sukuk markets,
- deposit insurance and safety nets,
- resolution frameworks,
- access to finance and financial inclusion,
- macroprudential and monetary policy interactions with participation finance.
Policy advice and recommendations
- Offers policy advice to address factors that hamper development of the industry and, more generally, the delivery of its potential benefits.
- Advice covers:
- regulatory and supervisory frameworks tailored to Islamic finance,
- design of safety nets and resolution frameworks compatible with Shari’ah principles,
- measures to enhance access to finance for small- and medium-sized enterprises,
- steps to develop and deepen Sukuk markets,
- macroeconomic policy considerations for economies with growing Islamic finance sectors.
Subject areas and keywords
- Subject: Banking, Deposit insurance, Financial crises, Financial regulation and supervision, Financial services, Islamic banking, Islamic banking supervision, Islamic finance
- Keywords: bank regulation, central bank, credit risk, Deposit insurance, financial inclusion, financial regulations, Global, infrastructure finance, Islamic bank, Islamic banking, Islamic banking supervision, Islamic finance, macroprudential policy, monetary policy, participation finance, public financial management, rate of return, SDN, Sukuk markets, tax policy