Contemporary Islamic Finance: Innovations, Applications and Best Practices

CHAPTER 16

Islamic Finance in an Almost Postcrisis and Postrevolutionary World

As in Politics, All Islamic Finance Is Local

MARK SMYTH

Managing Director of Amanie Advisors S.Á.R.L.

To speak of the modern practice of Islamic Finance is to speak of an industry that is subtly complex and widely stratified. It is a movement, which carries with it a political connotation that can and often does frustrate its development. But as in politics, all Islamic finance undertakings are local, or at least possess a strong local flavor. Islamic Finance is both a wholesale and retail approach to banking and is practiced to varying degrees with varying success in all four corners of the globe. It is a way of structuring financial transactions that represent, in theory, a better and more sustainable approach to finance, but which struggles to reach the necessary scale that would allow its benefits to be felt in the larger world. Transactions can be subtly different from the conventional approach or represent a striking departure from tradition. Many key attributes are widely accepted; others remain contentious, which is not to mention the existence of, admittedly slight, regional differences of interpretation. Hopefully with that brief bit of wordplay one can begin to get a sense of the difficulty in making sweeping statements about the global Islamic Finance industry.

HISTORY

In broad terms, the modern Islamic Finance industry began to take shape in the early 1990s. While many individual initiatives, ...