Islamic Finance Service Industry and Contemporary Challenges: A Literature Outlook (1987-2016)

Abstract

Keywords: Islamic finance service industry, Challenges, Shariah Compliance, legal framework Embryonic Islamic banking industry has documented marvellous growth worldwide since inception; stimulated sound rooted western banking to inculcate and include Shariah driven lucrative products and services as an integral part of corporate segment. Research to date has revealed its unique features and ethos, yet it has to overcome multifarious global impediments. The focus of this study is to encapsulate the enormous challenges Islamic finance service industry has encountered during last three decades. We find the arguments such as complex regulatory and supervisory issues; absence of uniform reporting standards; prudential challenges; misconception among western society pertaining to Islamic banking; scant financial instruments and concurrent money and capital markets; fierce compaction by western banking; lack of consensus among Shariah Scholars; and central governing body that are precarious challenges among others. Therefore, policy makers need to constitute an integrated central regulatory body to congregate speckled Islamic banking practices and to foster the underlying philosophy of Sharia compliance operation along with synchronized and unified standardized worldwide.