The Young World of Islamic Finance Essay

3174 Words13 Pages
The world of Islamic Finance is still young and it was begins only a few decades ago. Although it is new, the Islamic Finance is rapidly develop and continues to expand to serve a growing population of Muslim. Many have been able to accept the Islamic financial system and even admiration of Islamic finance is increasing due to the uniqueness found in the Islamic financial system. The definition of Islamic finance is the system in finance that operates it activities based on Islamic law (which is called Sharia) and is therefore Sharia compliant. All Islamic financial activities is free from interest (riba) and it is based on profit sharing activities. In 6th century, the core concepts of Islamic finance date back to the birth of…show more content…
In the same year, Shell MDS in Malaysia was issued the first tradable Sukuk which is the Islamic alternative to conventional bond and from it, the Islamic bond market was emerged. In 1996, Citibank began to offer Islamic banking services when it established City Islamic Investment Bank in Bahrain. The first successful benchmark for the performance of Islamic Investment funds namely the Dow Jones Islamic Market Index (DJIMI) was established in 1999. In the year of 2002, Malaysia-based Islamic Financial Services Board (IFSB) was established as an international standard –setting body for Islamic Financial Institutions. Lastly, the first Islamic commercial bank was established outside the Muslim world in 2004 which named Islamic Bank of Britain. From the year 1970 until now, more than 500 Islamic financial Institution have been established worldwide which include 300 Islamic banks. Currently, Islamic financial institution are operating in 75 Muslim and non-Muslim countries. There are several issues that arise in Islamic finance where the issues includes the lack of expertise in conducting Islamic finance system and also to supervise the system so that it according to Shariah compliant. Besides that, the diversion from conventional products to Islamic product also becomes one of the issue in
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