The global banking crises was good oportunity for Islamic banking , a community based system which does not use payment of interest, to become an alternative to conventional banking however the market is still small, said Azmi Omar, director general of Islamic Research & Training Institute (IRTI), an affiliate of Islamic Development Bank (IDB) .
Speaking at the ninth International Conference on Islamic Economies and Finance which began in Istanbul on Monday Omar said; "If you look back at 2008, 2009 people were not happy, they were demonstrating against their governments and the governments were looking for some alternatives. To me, Islamic finance can provide the alternative."
"Unfortunately" added Omar, "Islamic finance market is still small except some countries like Bahrain, Saudi Arabia, Malaysia but the rest are very small like one percent, two percent."
On the other hand, Omar highlighted that the trade between countries that already used the Islamic financial system grew, "from 20 to 50 percent annually" after the global financial crisis. Prospects for the future are good but to capitalize on the growth there is a need for more expertise, research and conferences on how to formulate policies to manage the expanded market.
"When the market expands do you have avaliable, ready policy? For example when you have a dual banking system, conventional and Islamic, how do you manage the monetary policy? So there are issues to be adressed."
"The turmoil in Syria and Egypt has had no negative or positive effects on Islamic banking and finance as it does not have any political agenda", commented another attendee at the conference Islamic Economist Prof. Humayon Dar.
“Because Islamic banking and finance has no political agenda it will not change the sentiment of people either to increase their business with Islamic banking or decrease,” Dar said. “Given this neutrality of Islamic banking and finance to politics there will not be any effects on the role of Islamic banking .”
He said when shareholders have some kind of political aspirations, their businesses may be badly affected by the turmoil and added “Shareholders involved in Islamic banking and finance all over the world are very neutral and business oriented people and they are looking for pure business opportunities.”
Dar said many people perceive that Islamic banking and finance, which generates around $1.6 trillion worldwide, is an oil driven phenomenon, which is only partially true.
“This is true in the case of Saudi Arabia and some other oil rich countries. But it is definitely not the case in the countries such as Malaysia, Indonesia, and Pakistan where oil does not have a very significant role,” Dar said.
(World Bulletin / 11 Sept 2013)
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