Report by Malaysia International Islamic Financial Centre

The development of Islamic finance is a joint effort of many different initiatives. With the support of multilateral institutions, it enables the Islamic finance industry to thrive even further. By providing multiple channels to the Islamic finance industry, they are creating a global bridge that enables Islamic finance to access multinational attention.

Role of Multilateral Institutions in the Development of Islamic Finance

Islamic finance has exhibited an exciting development over the last three decades, indicating one of the fastest growing sectors in the global financial system. To date, total global financial assets of the Islamic financial industry is estimated to be around USD2tln and expected to reach USD5tln in the next five years. The active and dynamic role manifested by various governmental and regulatory agencies in promoting the development of Islamic financial market in their respective countries are one of the main drivers in widening the outreach of the Islamic financial services industry from the supply side.

On the demand side, the increased awareness of both Muslim and non-Muslim investors toward Shariah compliant and ethical instruments are one of the main catalyst for its growth. Of more importance, the growth of Islamic finance has also been supported by the concrete and continuous effort and role played by the global multilateral entities namely World Bank, Islamic Development Bank (IDB) and International Monetary Fund (IMF).

Islamic Development Bank (IDB)

The development of Islamic financial sector is one of the key strategic thrusts of the IDB. In this regard, IDB has been actively involved in a number of initiatives, including developing the requisite enabling environment for Islamic finance, establishing and supporting Islamic financial institutions, developing Islamic microfinance sector from the financial sector perspective and
enhancing awareness about Islamic finance through organization and participation in awareness creation events.

Islamic Corporation for the Development of the Private Sector (ICD)

The ICD aims to identify opportunities in the private sector that could function as engines of growth and to provide them with a wide range of financial products and services and to encourage
the development of Islamic financing and capital markets.

International Monetary Fund (IMF)

Realizing the significant position of Islamic finance for many of its members, IMF has shown a long-standing interest in its implications for macroeconomic and financial stability, and played a key role in the establishment of the Islamic Financial Services Board (IFSB).

World Bank

World Bank has been involved in Islamic finance through its works and projects to reduce poverty and expand access to finance in its member countries, and building financial sector stability and
resilience.

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 Development of Islamic Finance – Support by Multilateral Institutions (1.46MB)