Exploring Connexion between Sovereign Wealth Funds and Islamic Finance in the Gulf Countries

Ashraf Mishrif and Erhan Akkas

International Journal of Economics and Finance, 2018, vol. 10, issue 5, 75-86

Abstract: This study explores the relationship between the development of sovereign wealth funds (SWFs) and Islamic finance in the Gulf Cooperation Council countries. It argues that despite a simultaneous growth in both industries in the petrodollar era, there has been insignificant degree of complementary between them and the size of SWFs investments in Islamic finance is limited. Analysis attributes such divergence to the peculiarity of SWFs¡¯ objectives, decision-making and investment strategy. Islamic finance has yet to provide low-risk long-term investment opportunities that are more attractive to SWFs than that available in the conventional market, hence bringing the industry under the funds¡¯ radar. The study concludes by arguing that despite such limitation, both SWFs and Islamic finance have contributed to economic development and have the potential to overcome such lack of conjunction.

Keywords: Sovereign wealth fund; Islamic finance; GCC countries; investment strategy; risk management (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:ibn:ijefaa:v:10:y:2018:i:5:p:75-86

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