Challenges Facing Islamic Financial Industry

Abstract

Zamir Iqbal in his article Challenges Facing Islamic Financial Industry, discusses the challenges facing the Islamic financial services industry. Islamic finance began three decades ago but now has spread to investment banking, project finance, capital markets, insurance, wealth management, and micro-finance. Although, Islamic finance has survived well despite the obstacles and skepticism of the critics, it continues to face many challenges. The author argues that at the present pace of growth and weak infrastructure, the industry will face challenges in achieving sustainable growth. On the contrary, if necessary policy measures are not taken, the industry may be adversely affected. The immediate need is to develop instruments that enhance liquidity; to develop secondary, money, and inter-bank markets; and to perform asset-liability and risk management. Its future growth and development will depend largely on the nature of innovations introduced in the market.