Publication:
The approaches and directions taken in Islamic banking and finance development
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Date
2012
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Abstract
The evolution of the Islamic banking and finance (IBF) industry from its humble beginnings in the 1970s has now grown to comprise of more than 600 Islamic banks and 90 takaful companies in over 75 countries. The industry is now managing US$1 trillion in assets with a growth rate of 15-20 per cent per year. Many view this stage as a seamless continuation of the three earlier decades (1970s-1990s) of IBF's development, in which scholars and practitioners habe ladi down its philospohical and conceptual foundations. This expansion might be seen as a success story which shows the world that Islam and the Islamic finance industry can contribute positively to solving modern finance needs. Islamic finance is one the main practical manifestation of the Islamic worldview in the field of economics and finance as well as one of the most visible features of Islamic revivalism in the latter part of the twentieh century. Some, however, do not view this development within such a short period of time as a natural progression from the pioneering stage. Many questions have been raised about the genuineness of IBF and the nature of its progress. While evaluating progress is always a subjective enterprise, the criticisms cannot be underestimated, especially if IBF intends to promote a real economy that can be sustainably developed in the future. This paper attempts to highlight the development of Islamic finance by looking at its emergence and the approaches taken in its development. Subsequently, the directional trends of development and their future outlook will be outlined. This paper argues that Islamic finance should be directed toward providing meaningful development in the twenty-first century. IBF must be competent in order to deliver its full potential as a system, not merely a stopgap means of surviving the crisis. IBF must go above and beyond by providing guidelines for managing a good economy, stimulating growth and development, promoting socio-economic justice, employment and stablitity, IBF cannot limit itself to merely offering economic and financial practices that satisfy the minimum standard of legal requirements.
Keywords
Islamic banking , Islamic finance , Development , Shari'ah
Citation
Laldin, M. A., & Furqani, H. (2012). The approaches and directions taken in Islamic banking and finance development. Australian Journal of Islamic Banking and Finance, 1(1), 105-118.
Publisher
Australian Centre For Islamic Financial Studies
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