Politicians worrying about the supply of credit to small and medium-sized businesses see capital markets as a possible solution, but the lack of standardised loans in the sector is making securitisation difficult.
Hussein Al Qemzi, group chief executive officer of Noor Investment Group and CEO of Noor Islamic Bank, believes that Islamic finance has the potential to evolve beyond its niche market and become the globally accepted norm in banking. But before it can do this, it must diversify its products and services, as well as achieve greater standardisation.
With sharia-compliant investments outperforming their 'conventional' counterparts, appetite for these products can only be expected to grow. But the industry is still too fragmented, according to Ian Lancaster of Cogent Asset Management, with a lack of cross-border connectivity preventing it from achieving critical mass.
Predictions that an end to US quantitative easing would cause a major upset in the bond markets have not materialised, but the landscape is changing gradually for primary issuance.
The growth that has characterised the rise of the Islamic finance industry has thus far evaded the asset management segment of the market, with a dearth of institutions focused on the creation of sharia-compliant investment products. John A Sandwick of Islamic Wealth & Asset Management assesses the situation.
Three senior figures from the Islamic finance industry discuss how sharia-compliant project finance has fared in 2013 after a stellar decade, and look at its prospects – with a particular focus on sukuk – for 2014 and beyond.
Islamic banks are growing more quickly than their conventional counterparts, but not all of this growth is generating good returns.
The US private placement bond market is proving popular with mid-sized European companies and those that lack credit ratings. American investors, starved of supply, hope the trend lasts a while longer.
While IILM's debut issuance of a $490m sukuk in August was a significant milestone for Islamic finance, it will barely dent the industry’s short-term liquidity management issues, which are hampering growth.
While costs have not changed much for the top 25 Islamic standalone banks between 2006 and 2012, returns have dropped significantly. The Banker takes an overview of the key factors determining their operational efficiency.
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