Islamic Finance: Opportunities, Challenges, and Policy Options

Alfred Kammer, Mohamed Norat, Marco Piñón-Farah, Ananthakrishnan Prasad, Christopher Towe and Zeine Zeidane

No 2015/005, IMF Staff Discussion Notes from International Monetary Fund

Abstract: The SDN discusses the main policy issues and challenges in building an inclusive and safe Islamic finance industry, with emphasis on Islamic banking and Sukuk markets. To this end, it discuses why Islamic finance matters, taking into account its recent and prospective growth; and, its potential contributions in terms of financial inclusion, support for small- and medium-sized enterprises and investment in public infrastructure and, in principle, reduced systemic risk. It then covers a range of regulatory and other challenges, and offers policy advice, to address factors that hamper the development of the industry and, more generally, the delivery of its potential benefits. The paper covers regulatory and supervisory issues, safety nets and resolution frameworks, access to finance, Sukuk markets, and macroeconomic policies.

Keywords: SDN; Islamic bank; central bank; monetary policy; rate of return; credit risk; Islamic finance; Islamic banking; participation finance; financial regulations; Sukuk markets; infrastructure finance; financial inclusion; macroprudential policy; tax policy; public financial management; bank regulation; Deposit insurance; Islamic banking supervision; Global (search for similar items in EconPapers)
Pages: 38
Date: 2015-04-06
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