Diversification of Islamic Financial Instruments
8
countries (including Bahrain, Malaysia and Iran as the leaders, and Saudi Arabia, UAE, Sudan,
Indonesia, Pakistan, Bangladesh, Jordan, Qatar, Oman, Kuwait etc.) and over 40 non-Muslim
countries including the UK (with London as one of the main Islamic finance centers), USA,
South Africa, Canada, Australia, Switzerland and Sri Lanka), with recent initiatives to launch
Islamic banking in countries like China and Germany. Though it started as an economic need
for faith-based (Muslim) investors, consumers, corporations and governments, today, Islamic
finance is no longer exclusive to Muslims. It is often seen as a form of ethical banking and
investing (with the legal guidelines based on Islamic law) and a possibly stable/less risky
alternative mode of financing by the non-Muslim world. The size and presence of the three
different sectors of the Islamic financial industry is summarized in the table below, as at
December 2015. Countries included in this report (excluding the United Kingdom, Nigeria and
Oman) are highlighted.
Table 4. Size of Islamic Finance Assets
Islamic
Finance
Assets
(US$Mn)
No. of
IFIs
Islamic
Banking
Assets
(US$Mn)
No. of
Islamic
Banks
Windows
Takaful
Retakaful
Assets
(US$Mn)
No. of
Takaful
Retakaful
Operators
Other
Islamic
Institutions’
Assets
(US$Mn)
No. of
Other
IFIs
Global 2,003,542 1,329 1,451,087 480 37745 322 106,351 527
Saudi
Arabia
446,664 127 350,128 16 14206 40 7,991 71
Iran 434,420 131 379,664 42 10502 27 27,574 62
Malaysia 414,343 77 159,986 39 7324 20 39,494 18
UAE 187,051 87 148,187 24 2072 17 5,593 46
Qatar 100,538 37 84,062 8 535 19 734 10
Kuwait 100,361 99 86,153 8 186 15 11,712 76
Bahrain 81,069 64 75,083 36 372 9 795 19
Turkey 51,710 6 41,710 5 1
Indonesia 47,645 138 20,081 33 1269 57 747 48
Bangladesh 26,192 45 25,438 26 669 18 85 1
Pakistan 22,164 69 15,120 23 174 13 2,607 33
Egypt 14,280 31 13,793 13 9 291 9
Sudan 11,110 54 11,010 32 43 14 58 8
Jordan 9,447 13 9,025 4 125 2 168 7
Switzerland 6,937 3 1 6,879 2
Source: Thomson Reuters (2016)
The size of the global Islamic finance industry has traditionally been measured in terms of the
value of assets held by institutions considered as a part of the Islamic finance industry. This
size (June 2016) was estimated at between $1.88 trillion to $2.1 trillion, with the market size
expected to reach more than $3.4 trillion by the end of year 20182. The Islamic banking
industry is typically measured both in terms of the size of its liabilities (deposits) and assets.
However, such figures generally underestimate the size of the industry, as they do not consider
Islamic equities as an asset class. According to the Islamic Financial Services Board (IFSB)’s
annual stability report, the total value of the global Islamic financial market industry was USD
1.88 trillion by the year 2015. The table below shows the breakdown by segments. As the table
2 ‘The Size of the Islamic Finance Market’, June 2016, .