The Expansion of Islamic Finance in the World: Review on International Organizations

Résumé

This study aims to examine the development of Islamic finance all over the world and the leading international organizations of Islamic finance in charge of the promotion and harmonization of Islamic products. For this purpose, we tried to examine the evolution of Islamic finance since the beginning of the 20th century and the size of assets in this sector. Then we discussed, the researches conducted by the international institutions in the area of Islamic finance and the development of the Islamic banking sector. The paper shows that this industry has known a huge development from the mid-1970s and has reached a certain level of maturity in the late 1990s. This expansion is because of, among other factors, the engagement of those organizations in terms of ensuring social justice, financial inclusion and sharing of resources between economic agents in need of financing and economic agents with the capacity to finance themselves by minimizing information asymmetry and transaction costs and thus ensuring a redistribution of wealth within the society. The Organization of Islamic Cooperation (OIC) and the Islamic Development Bank (IDB), for example, play an important role in the growth of Islamic finance through enhancing financial Inclusion for the (OIC) Countries. Furthermore, Standardization is becoming more important. AAOIFI, IFSB and IIFM, as the leading organizations in the field, therefore carry out this objective in order to establish ethical guidelines that make relationships fair and transparent. It is within this framework that this article aims to respond to the main question which is “To what extent those International institutions play an important role for the promotion and the expansion of Islamic Finance?”