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companies. In addition, Islamic finance Mater Plans should include key performance indicators
than can be measured and monitored over time in order to analyze and evaluate the success of
the Master Plan.
Master Plans should also play a key role in the development of governance practices within the
Islamic finance industry. The Master Plan should guide Islamic financial institutions in the
establishment of governance practices that uphold Islamic principles, promote stability in the
industry, and ensure accurate and efficient information production and dissemination.
Industry best practices such as IFSB and AAOIFI guidelines should be used as standards for
developing these policies. Finally, national development and Master Plans should also focus on
establishing regulatory regimes that promote the growth of a vibrant and stable Islamic
finance industry.
Improve Regulatory Standards
Given the highly regulated nature of the finance industry, countries should develop laws and
regulations that encourage the appropriate balance between the growth and stability of the
Islamic finance industry. Islamic financial institutions have some unique characteristics that
should be considered when developing a national financial regulatory structure. Issues
pertaining to capital adequacy and risk management in the Islamic finance industry are of
particular concern, and appropriate regulatory practices need to be established.
Additionally, regulatory practices need to be sensitive to the lessons learned from the recent
financial crisis. In particular, a more specific focus on non-bank Islamic financial institutions
should be implemented. Additionally, policy makers should develop a financial supervision
structure that is sensitive to issues surrounding recent innovations in both technology and
new financial products. A regulatory regime is needed such that Islamic financial institutions
are not overburdened by regulation and can continue to grow and innovate, while
simultaneously imposing restrictions that ensure a stable and efficient financial industry. The
Islamic finance Master and national development plans can play a key role in insuring that an
effective regulatory regime is established.
6.9.6 Promote the Integration of Islamic Finance Across Borders30
There has been substantial growth in the Islamic finance industry in many countries around
the world; however, there remains room for further integration of the Islamic financial
markets across international borders. Many international transactions involving Islamic
financial products do not flow through a centralized marketplace. Developing markets that
facilitate trading in international Islamic financial products will have several advantages.
Firstly, more integrated international markets will make price discovery faster and more
efficient. In addition, standardized international markets can lower the costs and the risks
associated with international transactions, which will encourage more efficient flows in
international Islamic financial products. Developing computerized markets that link
30 Islamic Research and Training Institute (2014): Islamic Financial Services Industry
Development: Ten Year Framework and Strategies, A Mid-Term Review