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Realizing the Potential of Islamic Finance

Author

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  • Mohieldin, Mahmoud

    () (World Bank)

Abstract

Islamic finance has been growing rapidly in recent years. Motivated by a heightened interest in financial instruments that emphasize risk sharing, it has been attracting greater attention in the wake of the recent financial crisis. This class of instruments appears to have avoided many of the most severe consequences of the crisis. Several features underpin the expansion and performance of Islamic finance. Addressing key regulatory and governance issues will be essential for Islamic finance to achieve its full potential. Several multilateral development institutions, including the World Bank, have longstanding programs to support the development of the industry and have used Islamic instruments, to varying extents, to tap capital markets. In the coming years, Islamic finance could account for a substantial share of financial services in several countries, meeting the preferences of significant numbers of people, enhancing financial inclusion and intermediation, and contributing more broadly to financial stability and development.

Suggested Citation

  • Mohieldin, Mahmoud, 2012. "Realizing the Potential of Islamic Finance," World Bank - Economic Premise, The World Bank, issue 77, pages 1-7, March.
  • Handle: RePEc:wbk:prmecp:ep77
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    References listed on IDEAS

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    1. Beck, Thorsten & Demirgüç-Kunt, Asli & Merrouche, Ouarda, 2013. "Islamic vs. conventional banking: Business model, efficiency and stability," Journal of Banking & Finance, Elsevier, vol. 37(2), pages 433-447.
    2. El-Gamal,Mahmoud A., 2009. "Islamic Finance," Cambridge Books, Cambridge University Press, number 9780521741262, April.
    3. Mohieldin , Mahmoud & Rostom , Ahmed & Fu, Xiaochen & Iqbal, Zamir, 2012. "The Role of Islamic Finance in Enhancing Financial Inclusion in Organization of Islamic Cooperation (OIC) Countries," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 20, pages 55-120.
    4. Tripp,Charles, 2006. "Islam and the Moral Economy," Cambridge Books, Cambridge University Press, number 9780521682442, April.
    5. Tripp,Charles, 2006. "Islam and the Moral Economy," Cambridge Books, Cambridge University Press, number 9780521863773, April.
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    Citations

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    Cited by:

    1. Dulce Redín & Reyes Calderón & Ignacio Ferrero, 2014. "Exploring the Ethical Dimension of Hawala," Journal of Business Ethics, Springer, vol. 124(2), pages 327-337, October.
    2. repec:bla:acctfi:v:57:y:2017:i:3:p:623-655 is not listed on IDEAS
    3. Guglielmo Maria Caporale & Mohamad Husam Helmi, 2016. "Islamic Banking, Credit and Economic Growth: Some Empirical Evidence," Discussion Papers of DIW Berlin 1541, DIW Berlin, German Institute for Economic Research.
    4. Gheeraert, Laurent & Weill, Laurent, 2015. "Does Islamic banking development favor macroeconomic efficiency? Evidence on the Islamic finance-growth nexus," Economic Modelling, Elsevier, vol. 47(C), pages 32-39.
    5. Dulce Redin & Reyes Calderón & Ignacio Ferrero, 2012. "Cultural Financial Traditions and Universal Ethics: the Case of Hawala," Faculty Working Papers 08/12, School of Economics and Business Administration, University of Navarra.
    6. repec:eee:riibaf:v:42:y:2017:i:c:p:1327-1335 is not listed on IDEAS
    7. Moazzam Farooq & Sajjad Zaheer, 2015. "Are Islamic Banks More Resilient During Financial Panics?," Pacific Economic Review, Wiley Blackwell, vol. 20(1), pages 101-124, February.
    8. Enrique A Gelbard & Mumtaz Hussain & Rodolfo Maino & Yibin Mu & Etienne B Yehoue, 2014. "Islamic Finance in Sub-Saharan Africa; Status and Prospects," IMF Working Papers 14/149, International Monetary Fund.
    9. Sweder van Wijnbergen & Sajjad Zaheer, 2013. "Sukuk Defaults: On Distress Resolution in Islamic Finance," Tinbergen Institute Discussion Papers 13-087/VI/DSF57, Tinbergen Institute.
    10. Moazzam Farooq & Sweder van Wijnbergen & Sajjad Zaheer, 2015. "Will Islamic Banking make the World less risky? An Empirical Analysis of Capital Structure, Risk Shifting and Financial Stability," Tinbergen Institute Discussion Papers 15-051/VI/DSF92, Tinbergen Institute.
    11. Ahmed,Habib & Mohieldin,Mahmoud & Verbeek,Jos & Aboulmagd,Farida Wael, 2015. "On the sustainable development goals and the role of Islamic finance," Policy Research Working Paper Series 7266, The World Bank.

    More about this item

    Keywords

    finance ministry; central finance agencies; fiscal; public finance; political economy; low-income countries; development; reform; public financial management; World Bank;

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F5 - International Economics - - International Relations, National Security, and International Political Economy

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