Regulating Islamic Financial Institutions: The Nature of the Regulated
More than 200 Islamic financial institutions (IFIs) operate in 48 countries. Their combined assets exceed $200 billion, with an annual growth rate between 12 percent and 15 percent. The regulatory regime governing IFIs varies significantly across c...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, D.C.
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2004/03/3935593/regulating-islamic-financial-institutions-nature-regulated http://hdl.handle.net/10986/14732 |
| Summary: | More than 200 Islamic financial
institutions (IFIs) operate in 48 countries. Their combined
assets exceed $200 billion, with an annual growth rate
between 12 percent and 15 percent. The regulatory regime
governing IFIs varies significantly across countries. A
number of international organizations have been established
with the mandate to set standards that would strengthen and
harmonize prudential regulations as they apply to IFIs. The
authors contribute to the discussion on the nature of
prudential standards to be developed. They clarify the risks
that IFIs are exposed to and the type of regulations that
are needed to systematically manage them. They consider that
the industry is still in a development process whose
eventual outcome is the convergence of the practice of
Islamic financial intermediation with its conceptual
foundations. The authors contrast the risks and regulations
needed in the case of Islamic financial intermediation
operating according to core principles and current practice.
They outline implications for approaches to capital
adequacy, licensing requirements, and reliance on market
discipline. They then propose an organization of the
industry that would allow it to develop in compliance with
its principles and prudent risk management, and facilitate
its regulation. |
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