Islamic Banking Regulation and Supervision: Survey Results and Challenges

Abstract

The growing presence of Islamic banking needs to be accompanied by the development of effective regulation and supervision. This paper examines the results of the survey conducted by the International Monetary Fund to document international experiences and country practices related to legal and prudential frameworks governing Islamic banking activities. Although a number of countries have made considerable progress in creating legal, regulatory, and supervisory frameworks that accommodate Islamic banking, there are substantial differences. This paper also identifies a number of challenges faced by regulatory and supervisory agencies regarding Islamic banking.

Keywords: Islamic banking, Commercial banks, Islamic banking supervision, Bank regulations, Bank deposits, Risk management, Transparency, Islamic banks, regulatory framework, capital, finance, legal framework, technical assistance, financial services, deposit insurance, market discipline, institutional development, banking regulation, auditing, loans, liquidation, capital requirement, financial institutions, capital adequacy, nonperforming loans, banking industry, equity, supervisory agencies, foreign exchange, supervisory framework, central banking, excess liquidity, credit risk, interest, market risk, accounting, capital requirements, equalization, operational risk, investment banking, governance, c

JEL Classification: G18, G21, P51