24 AN INTRODUCTION TO ISLAMIC FINANCE
RECENT TRENDS IN ISLAMIC FINANCIAL MARKETS
There is no formal or systematic source of statistics on Islamic fi nance but sev-
eral estimates are often quoted by different commercial and non-commercial
sources.^21 According to the 10-Year Master Plan for Islamic Financial
Industry prepared by the IDB and IFSB, by the end of 2005, more than
300 institutions in over 65 jurisdictions were engaged in Islamic fi nance. In
a broad sense, the Islamic fi nancial industry consists of a number of com-
ponents such as Islamic banks, Islamic windows, capital markets, Islamic
insurance (takaful) and other non-bank fi nancial institutions. Islamic bank-
ing usually refers to offshore and onshore deposit-taking commercial and
investment banking and is the most dominant sector of the market. Islamic
windows are specialized windows available through conventional banks
catering to the demands of Islamic products. Historically, Islamic banking
and windows have been the most active sector but in the last decade other
forms of fi nancial products and services have been gaining momentum.
Activities in the capital markets in the form of Islamic funds or Islamic
bonds (sukuk) are increasing and there are institutions specializing in asset
management, mutual funds, and brokerage houses. Islamic non-bank fi nan-
cial institutions, which include specialized institutions offering fi nancial
services through leasing (ijarah) or partnership (mudarabah), perform a
similar function to conventional fund-management companies. There is
a limited but growing number of institutions engaged in micro-fi nance,
venture capital and private equity fi nancing.
Table 1.3 shows the total size of different segments of the market, compiled
from different sources. Given the lack of transparency in fi nancial disclo-
sure by fi nancial institutions in developing countries, these estimates are, if
anything, on the conservative side, and the actual size of assets under manage-
ment is likely to be signifi cantly higher.
Islamic banks have experienced high growth, as shown in Table 1.4
which lists growth rates of assets and deposits in selected countries in the
Middle East and North Africa (MENA) region. From this, it is clear that
TABLE 1.3 Total assets under management as of 2010Sector Amount (US$ billion)Islamic banks 400
Islamic windows 250
Sukuk 120
Islamic funds 45
Takaful 5
Total 820Source: IFIS and other estimates