Risk and Regulation of Islamic Banking

Risk and Regulation of Islamic Banking

Foundations of Islamic Finance series

Edited by Mervyn K. Lewis, Mohamed Ariff and Shamsher Mohamad

From a single product offering in 1963, the Islamic financial services industry has grown to an estimated $1.6 trillion in assets. Products must comply with profit and risk-sharing criteria and regulations preventing banks from venturing into activities with high risk and excessive uncertainty. This timely volume analyses these matters and considers the range of new products, discussing both conceptual and practical dimensions. It connects Islamic finance to the mainstream theoretical literature on financial intermediation while also exploring its differences. The expert contributors also examine why an ethical foundation is important and why the system requires well-thought-out regulations to ensure outcomes that protect the community’s well-being.

Chapter 11: Major Islamic banking products and markets: a preliminary analysis

Mohamed Ariff and Meysam Safari

Subjects: asian studies, asian economics, economics and finance, asian economics, financial economics and regulation, islamic economics and finance, money and banking

Extract

Our analysis of Islamic banking is undertaken in this chapter with information from the BankScope database, which is a specialized database of banks with data spanning over 148 Islamic banks from 26 countries. Bahrain is the country with the largest number of Islamic banks (23). It is followed by Malaysia, Iran and Sudan, which have, respectively, 17, 16 and 12 full-licence Islamic banks. Apart from these countries, Islamic banking is found in the United Arab Emirates (UAE) (10 banks), Kuwait (9), Pakistan (9), Qatar (5), Turkey (5), United Kingdom (5), Iraq (4), Saudi Arabia (4), Yemen (4), Bangladesh (3), Brunei Darus Salam (3), Egypt (3), Jordan (3), Lebanon (3), Syria (2), Cayman Islands (1), Gambia (1), Indonesia (1), Mauritania (1), Palestinian Territory (1), Russian Federation (1), Singapore (1) and Tunisia (1). Total assets of all these Islamic banks were estimated in 2011 to be US$ 810 billion. Figure 11.1 is a summary statistic on Islamic banks by number.

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