Islamic finance has an enduring appeal aftermath of a global financial crisis, says Muhammad Al-Jasser, governor of Saudi Arabian Monetary Agency (SAMA) at the Sixth Annual Summit of the Islamic Financial Services Board (IFSB) in Singapore last week. The summit was attended by more than 250 Islamic financial services industry stakeholders from across the world.
His comment seems parallel with the speakers said at World Islamic Economic Forum (WIEF) held in Jakarta early this year. I noted that experts and practitioners of Islamic finance still have optimistic perspective on the development of Islamic finance industries, although the world’s struggle on global financial crisis is on the way.
More countries are affected by global financial crisis, including countries that addressing both conventional finance and Islamic finance. Currently, some countries are paying more attentions to Islamic finance and let the institutions grow.In response of global financial crisis, is there any need to revitalize Islamic financial services industry in the middle of reformation of global financial architecture?
A working paper issued by IMF indicates that institutions offering Islamic financial services constitute a significant and growing share of the financial system in a number of countries. The paper emphasizes the relative financial strength of Islamic banks and found that small Islamic banks tend to be financially stronger than small commercial banks. It also noted that the market share of Islamic banks does not have a significant impact on the financial strength of other banks.
Ahmed Mohamed Ali, president of the Islamic Development Bank (IDB), noted on Islamic financial resource and real economic activities:
that despite the relatively small resources managed by institutions offering Islamic financial services, the direct linkage of financial resources and real productive activities can help economies face the rising challenges, thereby alleviating poverty and mobilizing institutions such as Zakah and Awqaf in providing social safety-nets especially to the more vulnerable segments of the society.
More Islamic banks are concentrated in Muslim countries of Middle East and Southeast Asia. Some companies also provide a range of Islamic finance services from savings to life insurance, in Europe and United States. A data of AIG shows that Muslim countries only account for 5 percent of the global insurance market although they represent 25 percent of the world’s population.
Years ago, Islamic finance might be linked only to managing oil fortunes. Now, growing numbers of middle-class Muslims are also starting to run their financial lives according to Islamic principles. Some insurances services such life insurance is now available in Islamic financial system. It provided by some companies –you may ask your financial adviser to choose the fit features.
Basically, as part of Islamic financial systems, life insurance products that meet Islamic principles should manage the fund properly –prohibited involvement in alcohol industries, gambling, pork and other elements prohibited by Islamic law.