The Role of Sukuk in Islamic Capital Markets
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2.2 IMPORTANCE OF SUKUK IN DEVELOPING THE ISLAMIC FINANCIAL
MARKET
Sukuk represents the second-largest component of the Islamic finance industry, after Islamic
banking. Post-2000s, it has been championing the Islamic finance industry, capturing the
attention and interest of a wide range of issuers and investors. It has expanded the Islamic
financial market to far-off jurisdictions across the globe, with sukuk considered an important
fund-raising tool by both Muslim-majority and non-Muslim-majority countries.
2.2.1 ASSET DISTRIBUTION IN VARIOUS SEGMENTS OF ISLAMIC FINANCE
According to RAM, the global Islamic finance industry’s assets across its 4 main sectors (i.e.
Islamic banking, sukuk, Islamic funds and takaful) summed up to USD2.2 trillion as at end-
December 2016. The industry has been charting a CAGR of 5% since 2012. The ICM,
particularly sukuk, has been the fasting growing among all the asset classes in Islamic finance.
Islamic banking continues to dominate the industry, with USD1,657.0 billion of global assets as
at end-December 2016, representing 75% of the Islamic finance market. It was followed by the
sukuk market, with outstanding sukuk amounting to USD328.0 billion as at the same date,
accounting for 15% of the entire market. However, Islamic fund assets and takaful
contributions still only represent a small percentage of the Islamic finance industry, with a
respective USD183.0 billion (8% market share) and USD40.0 billion (2% market share). Chart
2.1 shows the breakdown of Islamic finance assets by sector as at end-2016, while Chart 2.2
illustrates the growth of Islamic finance assets between 2012 and 2016.
Chart 2.1: Sectoral Distribution of the Islamic
Finance Industry (2016)
Chart 2.2: Growth of Islamic Finance
Assets (USD billion, 2012-2016)
Source: RAM