What Has Been the Growth of the Islamic Finance Market So Far?
The islamic finance market has seen considerable growth due to a variety of factors.
• The scale of the Islamic finance market has seen rapid expansion in the preceding years. Expanding from $7.99 billion in 2024, it is expected to reach $8.94 billion in 2025, observing a compound annual growth rate (CAGR) of 11.9%.
This considerable increase in the historic period is a result of the increased demand for sharia-compliant products and practices, renewed interest driven by extensive oil wealth, the crucial role of risk-sharing in finance mobilization, robust investments in halal sectors, and the growth of Islamic banking services.
What Are the Future Growth Projections for the Islamic Finance Market?
The islamic finance market is expected to maintain its strong growth trajectory in upcoming years.
• The Islamic finance sector is predicted to experience a swift escalation in its market size in the coming years. The expansion rate is expected to reach a worth of $13.89 billion by 2029, maintaining a compound annual growth rate (CAGR) of 11.6%.
Elements such as the growing Islamic finance industry, an increasing Muslim demographic, adherence to ethical and socially-conscious investment practices, governmental backing and regulations, and the global acceptance of Islamic finance could be credited for this projected growth. Major future trends encompass the introduction of digital mechanisms in all goods and services, financial product innovation, the arrival of new Islamic exchange-traded funds (ETFs), the prevalence of ESG-based financial assets, and the amalgamation of financial technology.
What Are The Core Factors Supporting Growth In The Islamic Finance Market?
The rise in the Muslim community is anticipated to drive the expansion of the Islamic finance market in the future. This community's growth is attributed to high birth rates and a predominantly youthful demographic. To ensure their financial activities are in line with their religious values and principles, Muslims make use of Islamic finance, which follows shariah law. This law forbids interest and promotes ethical, risk-sharing economic practices. For example, the Alliance for a New Middle East Peace (ALLMEP), a non-profit organization based in the US, estimated that by the end of 2023, the Muslim community in Israel stood at 1.782 million, making up 18.1% of all inhabitants—an upsurge of 35,000 from 2022. Thus, the rise in the Muslim population is catalyzing the expansion of the Islamic finance market.
What Are The Major Segments Within The Global Islamic Finance Market?
The islamic financemarket covered in this report is segmented –
1) By Financial Sector: Islamic Banking, Islamic Insurance – Takaful, Islamic Bonds ‘Sukuk’, Other Islamic Financial Institutions (OIFI’s), Islamic Funds
2) By Size Of Business: Small And Medium Business, Large Business
3) By Banking: Retail Banking, Commercial Banking, Investment Banking
Subsegments:
1) By Islamic Banking: Retail Banking, Corporate Banking, Investment Banking, Islamic Microfinance, Islamic Cooperative Banks
2) By Islamic Insurance – Takaful: Family Takaful (Life Insurance), General Takaful (Non-Life Insurance), Health Takaful, Takaful Investment Accounts, Corporate Takaful Solutions
3) By Islamic Bonds ‘Sukuk’: Sovereign Sukuk, Corporate Sukuk, Sukuk Ijarah, Sukuk Murabaha, Sukuk Musharakah
4) By Other Islamic Financial Institutions (OIFIs): Islamic Investment Banks, Islamic Asset Management Firms, Islamic Leasing Companies, Islamic Microfinance Institutions, Islamic Credit Unions
5) By Islamic Funds: Equity Funds, Real Estate Investment Funds, Commodity Funds, Islamic Index Funds, Shariah-Compliant Mutual Funds.
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What Trends Are Reshaping The Future Of The Islamic Finance Market?
Leading corporations in the Islamic finance market are prioritizing innovation in financial products like digital banking platforms to secure a competitive advantage. Such platforms, which are internet-based services offered by monetary establishments, enable clients to conduct their banking activities electronically. This includes managing accounts, executing transactions, and accessing financial products via the web or mobile apps. As an illustration, Salaam Bank Limited, a commercial financial institution based in Uganda, introduced its initial interest-free commercial banking system and digital banking platforms in March 2023. This debut allows the bank to function in accordance with Islamic principles. The bank's domestic operations reinforce the idea that Islamic banking stands to greatly enhance Uganda's financial sector growth and encourage more Muslims to invest in the nation's economy.
Who Are the Key Players In The Islamic Finance Market?
Major companies operating in the islamic finance market are:
• Maybank Islamic
• Abu Dhabi Commercial Bank
• Etiqa Islamic Berhad
• Al Rajhi Bank
• Mellat Bank
• Riyad Bank
• Abu Dhabi Islamic Bank Egypt
• Kuwait Finance House
• Saudi British Bank
• Al Baraka Bank
• Bank ABC Islamic
• HSBC Amanah
• First Security Islami Bank
• Bank of Khartoum
• Al-Arafah Islami Bank
• Social Islami Bank
• Al Salam Bank
• Ajman Bank
• Al Hilal Bank
• Bank Islam Brunei Darussalam
• Bank Nizwa
• EXIM Bank
• Iraqi Islamic Bank of Inv & Dev
• Affin Islamic Bank
• OCBC Al-Amin Bank
• Bank Keshavarzi
• Barwa Bank
• Khaleeji Commercial Bank
What Is The Most Dominant Region In The Islamic Finance Market?
Middle East And Africa was the largest region in the islamic finance market in 2024. Asia-Pacific is expected to be the fastest-growing region in the market. The regions covered in the islamic finance market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa.
