National and Global Islamic Financial Architecture:
Prolems and Possible Solutions for the OIC Member Countries
15
regions. The predominant legal regime in OIC MCs is civil law that is based on the legal
systems of continental Europe in general and the French legal system in particular.
Table ‎2.1: Legal Regimes in OIC Member Countries
Regions Common Law Civil Law
Africa 3 14
Arab 6 15
Asia 7 11
Total 16 40
Source: La Porta et. al (1999) and World Bank (2004).
The relative status of the legal and regulatory environment in OIC MCs is assessed by using the
Regulatory Quality and Rule of Law indices published by World Bank. While the former reflects
‘perceptions of the ability of the government to formulate and implement sound policies and
regulations that permit and promote private sector’ the latter indicates ‘perceptions of the
extent to which agents have confidence in and abide by the rules of society, and in particular
the quality of contract enforcement, property rights, the police, and the courts, as well as the
likelihood of crime and violence’. The governance indicator estimates can take values ranging
from -2.5 (weak) to 2.5 (strong) performances. The average estimated values for 56 OIC MCs
were -0.58 for Regulatory Quality and -0.60 for Rule of Law.
Chart ‎2.1: Relative Regulatory Quality and Rule of Law of OIC MCs
Source: Calculated from World Bank World Governance Indicators Database
Chart 2.1 shows the averages of relative percentile ranks (ranging from a lowest of 0 to a
highest rank of 100) of countries in different income groups and OIC MCs for the two
governance indicators. The average Regulatory Quality percentile rank of OIC MCs is 33 which
is close to that of countries in the Lower Middle Income group. Similarly, Rule of Law average
ranking is at the 32 percentile which is slightly lower than that of the Lower Middle Income
group. Although the governance indicators are relatively better than that of Low Income
countries, overall the results indicate a relatively poor regulatory quality and rule of law
regimes when compare to other income groups.
73
87
22
34
49
33
75
88
20
34
49
32
0
10
20
30
40
50
60
70
80
90
100
High Income
nonOECD
High Income
OECD
Low Income Lower Middle
Income
Upper Middle
Income
OIC MCs
Percentile Ranks
Regulatory Quality Rule of Law