Islamic Finance is Growing Fast but Faces the Form-Versus-Substance Debate (Video)
Speaking at the Middle East Investment Conference in Dubai, Ibrahim Warde, adjunct professor at Tufts University in the United States and a noted author on Islamic finance, argued that since the 1990s Islamic finance has gained much more international acceptability but that it continues to grapple with the fundamental form-versus-substance debate.
With the current size of the Islamic finance market at over $1.3 trillion, Warde believes “it is not an exaggeration to say that in the world of finance, the fastest growing segment is Islamic finance.” The data he shared showed that assets of the Islamic financial sector grew by 21% in 2006, 29% in 2007, 16% in 2008, 18% in 2009, 22% in 2010, 20% in 2011, and an estimated 24% in 2012.
Here is a video recording of Warde’s presentation.
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The debate is indeed there. As expert Ajaz Khan says: “Islamic finance is, generally speaking, approaching a crossroads and we have to ask ourselves which direction we will now take. It has been developed for a number of years now and it has become more and more widespread but a lot of the institutions that have adopted Islamic finance are now essentially doing an exercise in financial engineering. They look at which exact religious rules they have to obey and think that, within these rules, they can come up with anything. So they’re not really changing their philosophy and way of doing business, they’re just changing the instruments.” In a nice conversation with the Halal Monk he talks more about Islamic finance and the contemporary questions surrounding it.