IslamicFinance.de

Islamic finance is based on two intrinsic features: risk-sharing and the link between financial transactions and the real economy. This critical link brings prudence to the system, promotes equity relative to debt, broadens financial participation, and minimizes overall vulnerability. Another dimension of Islamic finance is the promotion of economic welfare and social justice guided by the objectives of Shariah. Whether Islamic finance is a catalyst for inclusive growth and sustainable development is not as straightforward as one may hope. There are several other areas of Islamic finance which need significant improvements, including regulatory oversight, tax treatment, risk-management practices, and the level of awareness. Despite these limitations, Islamic finance has potential to serve as a tool for financial inclusion through leveraging the entrepreneurial potential of micro, small and medium enterprises (MSMEs) across sectors and bringing the financially underserved into the economic mainstream.