$1.6 Trillion Worth of Assets of Islamic Financial Industry By The End of 2012

Prepared company KFH Research Ltd., a subsidiary of Kuwait Finance House "KFH", a series of financial reports dealt with the reality of the Islamic financial sector and the prospects for its development in the next phase, to be discussed during IIFF which starts its work today in Malaysia, organized by the Malaysian government and the Central Bank, and continue its four days. Forum discusses in the first day of the study of the company about the reality of the global Islamic finance sector and the Islamic banking sector in particular, is expected to reach total Islamic financial assets amounting to about $ 1.6 trillion this year, and that the financial sector continues its strong growth in 2013.
islamic finance

A study the company's forum, attended by a large number of officials and businessmen and interested development Islamic financial services industry in Asia and the world, that there are ample opportunities to internationalize Islamic finance and spread globally, because of the great flexibility he has shown during the global financial crisis, and universally recognized products and Islamic financial services , and the ability of the sector to enhance liquidity and risk management, pointing at the same time that the challenges facing the deployment process, including the limited tools .. The following is a summary of the most prominent and the most important points covered in the study.

The focus of Islamic finance in the early stages of its development focus on countries with large Muslim population, such as Egypt, Malaysia and the Arab Gulf states (especially Saudi Arabia, Kuwait and the United Arab Emirates). Over the past decade, the evolution of the Islamic finance industry as an increasingly important element in the global financial system. Islamic finance received broad acceptance in many countries as a result of the growing recognition of the high value achieved by the Islamic finance for the financial system, and between these countries, the United Kingdom, Singapore and Germany. In recognition of Islamic finance capabilities, many countries have shown interest in becoming a center for Islamic finance, and some countries have established financial centers such as London, Hong Kong and Singapore. It is expected that the total global Islamic finance assets to $ 1.6 trillion in 2012, based on the following:

Increase demand for assets compliant with Islamic law
The active role played by some countries around the world to support the growth and development of Islamic financial markets in their own countries
Islamic banks have shown great flexibility during the global financial crisis, in spite of the turmoil that spread across the global financial markets. While the equity markets suffered such as binary options and mortgage insurance and financial losses after the real estate market bubble burst in the United States, showed the balance sheets of Islamic banks were not affected by large compared with their counterparts from conventional banks due to the following factors:

Governor of domestic credit: credit portfolios were mainly local, rather than foreign, with limited pressure on asset quality
Focus on retail banking: where high limited loyalty programs for customers as well as the stability of deposits, from the rush and the big draw is unusual on deposits by customers.
Provide high capitalization and high liquidity to relatively higher confidence levels than conventional banks.
Over the years, grown a range of financial products and services Islamic significantly, through innovations that come as a result of dialogue and links continuing between decision-makers in the Islamic finance industry, supported by an increase in awareness and knowledge with respect to the basic elements in Islamic finance and affecting the provision of products and services funding Islamic namely:

Customers need: to stimulate financial institutions to provide products and services that meet customer requirements.
Regulatory and supervisory support: the fact that the instructions allow a variety of products and services compliant with Islamic law
Unique suggestions: emphasis on the value and impact of Islamic finance to the sector's shareholders
Education and awareness, help in the creation and production of innovative solutions that can improve the efficiency of the products offered
Profitability: develop funds that can be directed to provide more products and services
Financing gap: the need to create financial intermediation
Competitiveness: stimulate product innovation in order to stay ahead of the market
Islamic finance over the past 30 years is stimulated largely by domestic sectors, but in recent years it has become gradually the fastest growing sector in the global financial system. And the evolution of market instruments in particular as a major factor contributing to the leadership of Islamic finance, and instruments and became an important way to raise funds globally, as well as stimulate investment activities and generate substantial financial flows from abroad. And easy access of the internationalization of Islamic finance and make it rise globally these other developments that have occurred in the international financial infrastructure Islamic, prompting the Islamic financial institutions to take the initiative to work beyond their local boundaries. There are currently more than 600 Islamic financial institutions operating in more than 75 countries, offering a wide range of products and services. With the internationalization of this sector, it is expected to contribute to Islamic finance in a more efficient move and the distribution of funds to various regions. This will enhance the trend of financial and economic links between the various global countries, bringing and achieve mutual benefits for all shareholders and owners of capital.

Opportunities and challenges of internationalization of Islamic finance

First: Opportunities

Enhance liquidity and the ability to manage risks for traders in the Islamic finance sector
International cooperation between regulators
Mutual recognition of standards and financial products across different countries through building on expanding the size of the partnership between practitioners, regulators and scientists
Improving the business environment to promote activities across different countries
Further development of Islamic financial infrastructure in underdeveloped markets
An effective tax system to deal with large disparities between income and wealth on the one hand and government support on the other hand
Second: the challenges

Limited set of tools, focus on short-term benefits, lower the depth and breadth of market support for mediation funds in the Islamic financial system
Should the financial system will facilitate a clear system of governance and strengthen the system against external pressures or threats, so as to reduce any risks that could lead to misappropriation or embezzlement
Still provide a qualified workforce and talent management in different countries is a regular, and given that talent development programs have only recently begun to expand and increase their numbers, it may take the Islamic finance sector and longer to reach a uniform growth across countries.

By taking a quick look at the Islamic banking sector in different parts of the world, we find that it has grown at a strong rate of between 15% To 20% Annually over the past decade, from about $150 billion in the mid-nineties to about 1.1 trillion in 2011. Based on the compound annual growth rate of 21.1% Between 2007 and 2011, it is expected that Islamic banking assets up to $1.3 trillion in 2012, accounting for more than 80% of the market share of the global Islamic finance assets. Not only the Islamic banking sector on the Muslim-majority countries of the GCC and South East Asia, but also extended to penetrate new regions in Central Asia and Europe, and that is working, many of which are currently on the developent and implementation of regulatory reforms and appropriate legal that would facilitate the provision and delivery of products and Islamic financial services. By the end of 2011, there were 363 financial institution operating in accordance with the Islamic banking system fully in addition to the 108 from traditional financial institutions to open and operate Islamic windows have. And despite the fact that the Islamic banking sector is currently accounted for 1.6% Of the total assets of the 50 largest banks in the world (a total of 66.2 trillion dollars at the end of 2011), but it is still one of the fastest growing sectors in the global financial services industry.

It is expected that the Islamic banking sector other future developments, especially with regard to the development of new products and services as well as open up new markets in different countries, this sector has proven its flexibility during the global financial crisis. It was the growth of Islamic banking services many positive effects on the global economy. Given that this sector is linked to the financing of real assets through the purchase and sale of goods to ensure utilization of the funds in real economic activities, and to ensure this feature also restrict the size of anticipated funding and the continuation of financial sector balance with economic growth. And given the rapid growth of Islamic banking system in the worldwide value and weight of the commercial feasibility of this sector in terms of providing returns to business as well as its positive effects on shareholders and owners of capital. And derive the feasibility of Islamic financing of its ability to meet the changing requirements of the economy and also the cost competitiveness of products and services it provides. The support is also developed within the framework of the legal and regulatory framework and supervisory highly sophisticated and who has had an important role to play in ensuring the integrity and stability.

Islamic banking sector witnessed in 2011 strong growth. And contain the Middle East on 80% Almost of Islamic banking assets, and Asia is a huge market where Malaysia has the largest market share by 9.6?. In terms of growth rate, Indonesia has had the strongest annual growth rate of 48.6?, Followed by Pakistan with 34.4? On an annual basis. The importance of the GCC states in being the home to some of the largest banks in the Islamic world such as Kuwait Finance House in Kuwait and Al Rajhi Bank in Saudi Arabia. The increase in Islamic banking activities in the countries of the Gulf Cooperation Council to a number of factors including increased domestic demand for Islamic financial products like Islamic Loans, and comes on top of those factors significant growth of savings in the Gulf, which is linked to oil prices pace. It is expected to continue to Islamic banking sector growth in the countries of the Gulf Cooperation Council strongly supported the foundations and economic stimulus through infrastructure projects sponsored by the government, as well as due to the strengthening of Islamic banks in some countries (Bahrain) and increasing the number of (Saudi Arabia and the UAE) and changes in regulations and regulatory (Qatar) which will benefit the sector as a whole.

It is expected that the Islamic banking sector encouraging developments where emerging economies such as Turkey, Indonesia, India and China to promote and stimulate alternative formulations of financial intermediation, supported by growing demand for banking products and services alternative. It is expected to help create the Islamic banking sector in a number of countries to encourage and accelerate the pace of market instruments in order to meet liquidity requirements. Despite the positive developments that have been achieved in the light of the deteriorating global economic environment, but the lack of education and awareness about products and services in some countries and regions, as well as legal and tax matters are among the challenges that will be faced by the Islamic banking sector.

However, it is expected that this sector continues to show strong growth, supported by the following factors:

Sustained economic growth in 2013 across emerging markets ( Islamic finance in Morocco ), supported by economic stimulus packages
Abundant liquidity flows on the back of rising oil prices
The active role played by some countries in different parts of the world in order to stimulate the development of the Islamic financial markets in their own countries
A combination encouraging population and increase the level of awareness has contributed towards increasing demand for products compliant with Islamic law. The number of the Islamic world's population currently stands at 1.6 billion, including 62% Almost in Asia.
Is expected to be a growth sector global food'm positive effects on the Islamic banking and finance, as should be the source of funding for the Halal food sector is compatible with the principles of Islamic Sharia.

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