Islamic finance must become more innovative if it is ever to be part of global mainstream finance, Nasser Saidi, chief economist of the Dubai International Financial Centre Authority (DIFCA), said. He added that the industry also faces few liquidity options, a lack of regulatory compliance and insufficient systems to deal with insolvency.
“One of the major problems in Islamic finance is it has systems for liquidation but not to help with restructuring,” added Saidi, who is also the director of the Hawkahmah Institute for Corporate Governance at DIFCA. He said however, that in the wake of the global financial crisis and a series of high profile scandals on Wall Street, Islamic finance is enjoying great global inter-est as a result of “a distinct shift towards more ethical finance”.
Saidi said over 20 per cent of the world is Muslim, giving Islamic finance a “captive demand”.
However, he said the sector cannot take that demand for granted, and has to work to capitalise on it in the coming years.
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