366 AN INTRODUCTION TO ISLAMIC FINANCE
TABLE 17.1 Suggestions for enhancing the Islamic fi nancial industry
Islamic Banking
Money, Capital
Markets
Legal/Regulatory
Issues Others
Consolidation Develop liquidity -
enhancing
mechanisms
Enhance and
harmonize
standards
Social sector fi nancing.
Institutionalization
of Islam’s
redistributive
instruments
Expand scope,
services,
products
Develop asset -
linked, rather
asset - based,
products
Enhance
corporate
governance
Develop non -
bank fi nancial
intermediation
Enhance risk
management
Develop sukuk
based on
intangible
assets such
as services,
rights, working
capital, etc.
Enhance Shari’ah
governance
Reputational risk
Lessen reliance on
commodity/
fi xed-income -
like products
Develop
partnership
and risk-
sharing
products
Supervision and
monitoring
Financial engineering.
Ease of product
development
Reduce exposure
to operational
risk
Develop Shari’ah -
compliant
securities/stock
markets
Financial Sector
development
Hedging with
or without
derivatives
Liquidity-
enhancing
products
Develop Islamic
benchmarks
Investor/creditor
rights
Public fi nance
Hedging products Public fi nance
instruments
Insolvency laws Monetary policy
management
Source: Iqbal (2010)
fi nance has primarily been driven by business needs to establish an Islamic
banking and fi nancial system, and less attention has been paid to developing
a comprehensive analytical framework based on Islamic economic princi-
ples. The progress in understanding and describing economic behavior as
envisioned by Islam is slow and needs more attention. Without a solid foun-
dation and rigorous analytical work, it would be diffi cult to present viable
solutions to economic and social problems.