Thursday, April 17, 2008

Rapid growth of Islamic finance accompanied by heterogeneity of interpretations, lack of standardization

A recent report on Islamic finance from Moody's says that while Islamic finance is growing rapidly, there is great heterogeneity between different Islamic financial institutions. This heterogeneity, Moody's believes, is not the result of fundamental differences in views about Islamic finance, but are focused on differences in interpretations of the Shari'ah-compliance of specific products. Standard & Poors believes the $50 billion mark for sukuk issuance will be crossed shortly and the $100 billion mark will be surpassed by the end of the decade.

Mohammed Daud Baker, a Shari'ah scholar from Malaysia, believes that Islamic finance should have greater standardization of products. He also commented in opposition to creating an Islamic 'gold standard'.

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