The Working Paper series is a continuation of the formerly named Discussion Paper series;
the numbering of the papers continued without interruption or change. ADBI’s working
papers reflect initial ideas on a topic and are posted online for discussion. Some working
papers may develop into other forms of publication.
In this report, “$” refers to United States dollars.
Suggested citation:
Komijani, A. and F. Taghizadeh-Hesary. 2018. An Overview of Islamic Banking and Finance
in Asia. ADBI Working Paper 853. Tokyo: Asian Development Bank Institute. Available:
adb/publications/overview-islamic-banking-and-finance-asia
Please contact the authors for information about this paper.
Email: farhad@aoni.waseda.jp, farhadth@gmail
Akbar Komijani is a professor of economics at the University of Tehran. Farhad
Taghizadeh-Hesary is an assistant professor of economics at the Faculty of Political
Science and Economics of Waseda University in Tokyo.
The views expressed in this paper are the views of the author and do not necessarily
reflect the views or policies of ADBI, ADB, its Board of Directors, or the governments
they represent. ADBI does not guarantee the accuracy of the data included in this paper
and accepts no responsibility for any consequences of their use. Terminology used may
not necessarily be consistent with ADB official terms.
Working papers are subject to formal revision and correction before they are finalized
and considered published.
Asian Development Bank Institute
Kasumigaseki Building, 8th Floor
3-2-5 Kasumigaseki, Chiyoda-ku
Tokyo 100-6008, Japan
Tel:+81-3-3593-5500
Fax:+81-3-3593-5571
URL:adbi
E-mail:info@adbi
2018 Asian Development Bank Institute
ADBI Working Paper 853 Komijani and Taghizadeh-Hesary
Abstract
The Islamic finance industry has grown substantially in Asia over the last 2 decades.The
Muslim populations in different Asian countries, especially in Southeast Asia, are increasing.
Rapid Muslim population growth and improving living standards may enhance the popularity
of Islamic finance as a keen alternative to conventional financing mechanisms. In addition,
investors from the Middle East and Asia are increasingly seeking to invest in products that
are in line with their religious beliefs.
The governments and financial authorities in several Asian countries have played active
roles in promoting the development of Islamic financial markets in line with the efforts to
boost investments and achieve sustainable funding to enhance economic growth by tapping
the huge liquidity from oil- and commodity-producing countries.
The ethical character and financial stability of Islamic financial products may increase their
attraction. Islamic financial products have an ethical focus (notably excluding investment in
alcohol and gambling) with a risk profile that appeals to wider ethically conscious investors.
Given that in Islamic banking returns on investments are based on underlying economic
activities and/or assets that structure the contractual relationship between transacting
parties, it is possible to use the asset-based nature and risk-sharing aspects of Islamic
finance for greater integration with the real economy and to improve the overall economic
balance between the real and the finance sector.
Keywords: Islamic banking, Islamic finance, Muslim finance, Muslim banking, sukuk,
mudarabah
JEL Classification: F3, G2
ADBI Working Paper 853 Komijani and Taghizadeh-Hesary
Contents
1. INTRODUCTION ......... 1
2. OVERVIEW OF ISLAMIC BANKING AND FINANCE . 1
2.1 Principles of Islamic Financial Systems ........... 2
2.2 Characteristics of Islamic Financial Systems .. 3
2.3 Features of Islamic Banks and Islamic Banking Contracts ...... 4
3. ISLAMIC BANKING AND FINANCE IN ASIA .. 6
3.1 Challenges of the Islamic Capital Market ........ 9
3.2 Regulatory Environment for Islamic Banking and Finance in Asia ...... 9
3.3 Recent Developments in the Issuance of the Infrastructure Sukuk ... 11
4. OUTLOOK ..... 13
REFERENCES ......... 14。。。