The 2025 Islamic Finance Development Indicator (IFDI) assessed 140 countries, with the global average score declining to 11 due to new entrants scoring low in most indicators. The top 10 countries remained unchanged, led by Malaysia and the UAE, which excelled across all five indicators. Notable shifts include Bangladesh dropping out of the top 10 due to Islamic banking sector challenges, while Tanzania showed promise with Sukuk issuance and sector growth.
Entrepreneurs may have less or more capital than they plan to invest. Owners of surplus capital may withhold it or may make it available to investors. This may be based on profit sharing ratio or interest. In the Islamic system, charge of Zakah assisted by expected share in profit motivates the owners of capital to get it invested while in a capitalist system, interest motivates the capitalist creditors to lend capital for earning interest.
The earlier scholars provided application of Islamic juristic principles to derive and apply the Islamic teachings related to commerce, entrepreneurship and consumption. Muslim scholarship initially focused on public finance and its administration to deal with the practical problems of the newly formed state which expanded rapidly and required sound legal and administrative framework to legislate economic activities centred around agriculture and trade.
Clarity on issue of Riba is so important in Shari’ah that while recognizing change in value due to change in quality, it does not force us to exchange different qualities in equal quantity and yet in case of Amwale Ribuwiah, it does not allow these to be directly exchanged with any excess of weight (quantity) on either side. As generally understood by our scholars, this restriction was essential to stop practice of Riba by hiding behind difference in quality.
Total IFSI assets reached USD 3.88 trillion, marking a significant 14.9% year-on-year (YoY) growth compared to 2023. This acceleration in asset growth outpaced the average rates of recent years. The growth momentum reflected accommodative global financial conditions in 2024 driven by lower interest rate expectations and easing inflation, which revived market sentiment and capital flows, alongside sustained demand for Islamic financial services, and increased market participation across key Islamic finance jurisdictions.
The authors conclude that more research is needed to fully understand the relationship between monetary policy and Islamic banking. They emphasize the importance of considering factors like the structure of Islamic banks’ balance sheets and the influence of profit-and-loss sharing in deposits and financing. The authors note that the existing research has a lack of theoretical grounding. Most studies focus on whether monetary policy influences Islamic banks, but they do not investigate why this happens. The authors suggest that the theory of Islamic finance could offer explanations.
The book explains that the objective of religious life should be to change this world, including the personality of the individual himself and extending to the whole of human society, so as to reconstruct it in accordance with the will of Allah as revealed in the Qur’an. The religion should be understood directly from the Qur’an aided by the Sunnah, and all human interpretations should be treated as secondary, tentative and, in principle, liable to error and open to correction.
Authors think that internet crowdfunding is positioned to assume a pivotal role in fundraising efforts catering to a diverse range of emerging Waqf needs, both domestically and internationally. Consequently, there is a pressing demand for an enhanced level of professionalism in Waqf fundraising, particularly when it pertains to the establishment of the financial mechanisms required for such endeavours.
Al Baraka Forum for Islamic Economy in collaboration with the Islamic Chamber of Commerce and Development (ICCD) hosted the 2nd Al Baraka Regional Conference, in partnership with Al Baraka Bank Pakistan, to shed light on the crucial role of home remittances in Pakistan and their impact on sustainable development.
There are various risks faced by Islamic banks in liquidity management due to the i) absence of an Islamic inter-bank market, ii) lack of Shari’ah compliant alternatives for liquidity management, both at the inter-bank and central bank level, iii) absence of liquid Islamic Sukuk both in short and long term maturities and iv) absence of Islamic discount window at the central bank level for Islamic financial institutions.
Islamic Economics Project 