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Insight: The bright prospect of Islamic capital markets
Islamic assets have tripled in the post-global financial crisis period, representing an estimated US$2 trillion in banking assets and approximately $400 billion in capital market assets.
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According to the Religious Affairs Ministry, almost 40 percent of the haj funds have been invested in sukuk and project-based sukuk since 2010 under an agreement with the Finance Ministry. (Shutterstock/File)
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ast week I attended the Islamic Development Bank (IDB) Group’s Board of Governors Annual Meetings in Tunis to represent Indonesia as one of its shareholders. The meeting attracted over 1,000 participants from all IDB Group member countries and offered a vibrant platform for decision makers to discuss various economic, financial and development issues.
One of the main topics was the prospect of Islamic capital markets. Islamic finance has a pivotal role in shaping the future of the global financial system. It offers an ethical approach that emphasizes the moral values invested in Islamic finance basic principles itself. Thus, the continuous work to further expand and strengthen the Islamic financial industry is an integral part of increasing global economic growth, in parallel with the effort to enhance global financial stability.
In the last decade, Islamic finance has been one of the fastest growing segments of the global financial industry and continues to outgrow and outpace conventional finance. Islamic assets have tripled in the post-global financial crisis period, representing an estimated US$2 trillion in banking assets and approximately $400 billion in capital market assets. This positive trend is predicted to grow steadily to exceed $3 trillion by 2020.
Islamic finance not only attracts Muslim-majority countries but it has also been gaining attention from other nations. The practice of Islamic finance, which attracts many sectors, has been driven largely by its competitive features, such as the risk-sharing concept, which deploys finance to the real economy and facilitates redistribution of wealth and opportunity.
