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An Overview of Islamic Finance

Author

Listed:
  • Mumtaz Hussain

    () (International Monetary Fund (IMF), 700 19th Street, N.W., Washington, D.C. 20431, USA)

  • Asghar Shahmoradi

    () (International Monetary Fund (IMF), 700 19th Street, N.W., Washington, D.C. 20431, USA)

  • Rima Turk

    () (International Monetary Fund (IMF), 700 19th Street, N.W., Washington, D.C. 20431, USA)

Abstract

Islamic finance has started to grow in international finance across the globe, with some concentration in few countries. Nearly 20% 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 (IBs), however, is so far mixed. While these banks face similar risks as conventional banks (CBs) 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.

Suggested Citation

  • Mumtaz Hussain & Asghar Shahmoradi & Rima Turk, 2016. "An Overview of Islamic Finance," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 7(01), pages 1-28, February.
  • Handle: RePEc:wsi:jicepx:v:07:y:2016:i:01:n:s1793993316500034
    DOI: 10.1142/S1793993316500034
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Uddin, Md Akther, 2016. "Reemergence of Islamic Monetary Economics: A Review of Theory and Practice," MPRA Paper 72081, University Library of Munich, Germany.
    2. repec:eee:quaeco:v:66:y:2017:i:c:p:212-224 is not listed on IDEAS
    3. Meslier, Céline & Risfandy, Tastaftiyan & Tarazi, Amine, 2017. "Dual market competition and deposit rate setting in Islamic and conventional banks," Economic Modelling, Elsevier, vol. 63(C), pages 318-333.
    4. repec:eee:quaeco:v:67:y:2018:i:c:p:14-27 is not listed on IDEAS
    5. Ibrahim, Mansor H., 2016. "Business cycle and bank lending procyclicality in a dual banking system," Economic Modelling, Elsevier, vol. 55(C), pages 127-134.
    6. repec:eee:jeborg:v:138:y:2017:i:c:p:50-62 is not listed on IDEAS
    7. Mariam El Hamiani Khatat, 2016. "Monetary Policy in the Presence of Islamic Banking," IMF Working Papers 16/72, International Monetary Fund.
    8. Malika Akhatova & Mohd Pisal Zainal & Mansor H. Ibrahim, 2016. "Banking Models and Monetary Transmission Mechanisms in Malaysia: Are Islamic Banks Different?," Economic Papers, The Economic Society of Australia, vol. 35(2), pages 169-183, June.

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