Islamic Financial Markets and Institutions: Challenges, Financial Stability, and Inclusivity

Islamic finance has experienced significant growth, particularly in the Middle East, driven by financial innovation and the expansion of asset securitization. This progress is crucial for the future development of Islamic financial institutions (IFIs), but it also requires a strong regulatory framework and effective monetary policies to ensure stability and inclusivity. Maintaining compliance with Islamic law while addressing modern financial challenges presents unique complexities, from risk-sharing mechanisms to the integration of digital banking.

This book examines the evolving landscape of Islamic finance, exploring the challenges that IFIs face, including limited financial inclusion, the dominance of non-Muslim ownership, and gaps in regulatory oversight. It emphasizes the importance of transparency, standardized regulations, and incorporating Shariah compliance into financial supervision. Through empirical research and case studies from various markets, including Iran, Malaysia, and Indonesia, the book highlights the risks and opportunities within Islamic financial markets.

Key topics include financial inclusion, regulatory reforms, the resilience of Islamic finance during economic crises, and the role of fintech in expanding access to Islamic financial services. The book also discusses innovative financial instruments, such as Islamic crowdfunding, green sukuk, and Takaful, highlighting their potential to promote sustainable development. It argues that while Islamic finance offers ethical and stable alternatives to conventional banking, stronger governance, technological integration, and policy reforms are necessary to ensure its long-term viability.

Bringing together insights from leading researchers and practitioners, this book provides a comprehensive analysis of the current state and prospects of Islamic finance. It is an essential resource for policymakers, financial regulators, and industry professionals looking to enhance financial stability and inclusivity within the Islamic financial system.

Dr. Farhad Taghizadeh-Hesary is an associate professor of economics and finance at Tokai University in Tokyo, Japan, and serves as the Chief Economist of Climate Finance Asia. He is the Editor-in-Chief of the Journal of Environmental Assessment Policy and Management and an Associate Editor for several other academic journals. In 2023, he was awarded the Medal and Commendation for Science and Technology by Japan’s Minister of Education in recognition of his outstanding research achievements. A Highly Cited Researcher recognized by Clarivate Analytics, Dr. Taghizadeh-Hesary has published over 400 academic journal articles, book chapters, and over 30 books. His research primarily focuses on sustainable economics, green finance, and Islamic banking and finance. With sustainability as his primary research focus, he is currently exploring the role of Islamic finance in bridging the sustainability financing gap. Dr. Taghizadeh-Hesary holds a Ph.D. in economics from Keio University, Japan.

Dr. Hassanudin Mohd Thas Thaker is an associate professor of financial economics at the Department of Economics, Kulliyyah of Economics and Management Sciences, International Islamic University Malaysia (IIUM) and Research Fellow at the Centre for Islamic Economics, IIUM. His expertise includes international trade, crowdfunding, Islamic finance, fintech, ESG, and affordable housing. He holds a Postgraduate Certificate in Academic Practice (PGCAP) from Lancaster University, UK, and actively engages in research and industry grants. With more than 100+ research articles, he has received numerous accolades, including Best Paper and Distinguished Paper Awards, the Emerald Literati Outstanding Paper Award, and the Vice-Chancellor’s Research Award.  In addition, he has co-organized the Foundations of Islamic Finance Conference since 2019.

Dr. M. Ishaq Bhatti is an adjunct professor of finance and financial econometrics and the founding director of the Islamic Banking and Finance Program at La Trobe University (LTU), Melbourne. He is also a Professor of Financial Data Analytics at SP Jain School of Global Management, Sydney. With over 30 years of teaching and research experience, he has published 160+ research articles, authored 10 books, and contributed to encyclopedias. He serves on editorial boards of international journals and edits the Islamic Business and Finance series for Routledge. He actively advises institutions like the Islamic Development Bank and the Australian National Zakat Foundation and co-organizes global conferences on Islamic finance.

Dr. Anwar Allah Pitchay is an associate professor at the School of Management, Universiti Sains Malaysia (USM). He holds a Ph.D. in Islamic Finance from the International Islamic University Malaysia, a Master’s degree in Business Administration from Universiti Sains Malaysia, and a Bachelor's degree in Finance from Universiti Teknologi MARA, excelling in the field. Dr. Anwar has made significant academic contributions with eight years of teaching and research experience in Islamic Finance. He has supervised five postgraduate students to graduation and oversees 20 postgraduate scholars. He has published 100 articles in highly cited and non-cited journals, demonstrating his scholarly impact beyond the classroom. His research projects have received $50,000 in grants from international and national funding agencies.