Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/190274 
Year of Publication: 
2018
Series/Report no.: 
ADBI Working Paper No. 853
Publisher: 
Asian Development Bank Institute (ADBI), Tokyo
Abstract: 
The Islamic finance industry has grown substantially in Asia over the last 2 decades. The Muslim populations in different Asian countries, especially in Southeast Asia, are increasing. Rapid Muslim population growth and improving living standards may enhance the popularity of Islamic finance as a keen alternative to conventional financing mechanisms. In addition, investors from the Middle East and Asia are increasingly seeking to invest in products that are in line with their religious beliefs. The governments and financial authorities in several Asian countries have played active roles in promoting the development of Islamic financial markets in line with the efforts to boost investments and achieve sustainable funding to enhance economic growth by tapping the huge liquidity from oil- and commodity-producing countries. The ethical character and financial stability of Islamic financial products may increase their attraction. Islamic financial products have an ethical focus (notably excluding investment in alcohol and gambling) with a risk profile that appeals to wider ethically conscious investors. Given that in Islamic banking returns on investments are based on underlying economic activities and/or assets that structure the contractual relationship between transacting parties, it is possible to use the asset-based nature and risk-sharing aspects of Islamic finance for greater integration with the real economy and to improve the overall economic balance between the real and the finance sector.
Subjects: 
Islamic banking
Islamic finance
Muslim finance
Muslim banking
sukuk
mudarabah
JEL: 
F3
G2
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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