An Overview of Islamic Finance

36 Pages Posted: 29 Jun 2015

See all articles by Mumtaz Hussain

Mumtaz Hussain

International Monetary Fund (IMF) - Policy Development and Review Department

Asghar Shahmoradi

University of Calgary - Department of Economics; International Monetary Fund (IMF)

Rima Turk-Ariss

International Monetary Fund; Economic Research Forum

Date Written: June 2015

Abstract

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.

Keywords: Islamic banking, Banks, Financial services industry, Financial instruments, Bonds, Risk management, Financial stability, Monetary policy, Fiscal policy, Islamic Finance, Sukuk, markets, profit, international finance, lender

JEL Classification: E44, E52, E58, G15, G21, G28

Suggested Citation

Hussain, Mumtaz and Shahmoradi, Asghar and Turk-Ariss, Rima, An Overview of Islamic Finance (June 2015). IMF Working Paper No. 15/120. Available at SSRN: https://ssrn.com/abstract=2623805

Mumtaz Hussain (Contact Author)

International Monetary Fund (IMF) - Policy Development and Review Department ( email )

700 19th St. NW
Washington, DC 20431
United States
(202) 623-4027 (Phone)

Asghar Shahmoradi

University of Calgary - Department of Economics ( email )

2500 University Drive, NW
Calgary, Alberta T2N 1N4
Canada

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Rima Turk-Ariss

International Monetary Fund ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Economic Research Forum ( email )

21 Al-Sad Al-Aaly St.
(P.O. Box: 12311)
Dokki, Cairo
Egypt

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
207
Abstract Views
1,008
rank
154,523
PlumX Metrics