Introduction

Islamic finance is consistent with Sharia. It’s a Sharia compliant finance. The market has grown 50 per cent faster than the traditional banking sector globally. The Islamic development bank has been instrumental in the growth of Islamic finance. In this paper we seek to cover the importance of Islamic finance in the world’s economy.

The Islamic financial service board is cooperating with non-member countries and organizations with related interests and similar goals to promote supervisory practices and to accommodate the growing importance and sophistication of non-member banks (Knight 2007). This has led to significance growth as non-Islamic bank are requesting to offer Islamic services and also new banks all over the have been opened to offer these services.

Islamic finance prohibits acceptance of specific interests or fees for ‘riba’ whether the payment is fixed or floating. Many businesses prefer such rules that protect the customer. Risk sharing transactions and undertakings in Islamic finance thus offer potential to reinforce links between finance and real economy (Knight 2007). The opening of Islamic financial sectors in Australia will opened doors to new opportunities and also encourage competition and this will lead better services by other banks and lower interest rates (Kachor 2013).

As we have seen, the Islamic banks in many countries has promoted growth and led to introduction of new services and removal of regulatory barriers. These banks have got strict risk management ways of dealing with losses and are accountable for money lost. It will be increasingly important to ensure sound Islamic financial institutions going forward. Banks should be transparent and stop overcharging customers. This will lead to good international banking systems and improved services to the good of the people. Islamic financial institutions are highly appreciated in the society and have led to improvement in the world’s economy and stabilization of the economy. Its rules are strict and are followed to the letter. That is why we should promote these institutions.

References

Knight, D.M. 2007. The growing importance of Islamic finance in the global financial system.. Bank for international settlement. Online

Available at: <http://www.bis.org/speeches/sp071210.htm>[ Accessed 10 June 2014].

Kachor, kate, 2013. Govt flags importance of Islamic finance. Financial observer. Online

Available at:< http://www.financialobserver.com.au/articles/govt-flags-importance-of-islamic-finance> [ Accessed 10 June 2014]

The growing importance of Islamic finance in the global financial system. 2007. Online

Available at: < http://ifinanceexpert.wordpress.com/2007/12/12/the-growing-importance-of-islamic-finance-in-the-global-financial-system/> [accessed  10 June 2014].

 
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