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Islamic Finance Development Indicator launched in Dubai

The ICD-Thomson Reuters Islamic Finance Development Indicator, or IFDI, was officially launched on Tuesday in Dubai.

The indicator is a numerical measure representing the overall health and growth of the Islamic finance industry worldwide.

The IFDI was officially launched by Khaled Al Aboodi, chief executive officer, Islamic Corporation for the Development of the Private Sector, at the Global Islamic Economy Summit (GIES) to expand the scope of Thomson Reuters’ universe of Islamic finance content, research and news analysis.

“The indicator is designed to assess how well the industry has addressed its religious, economic, legal, ethical and discretionary responsibilities. It provides simplified, quantified, development, knoweledge, corporate and social responsibility, governess and awareness,” Al Aboodi said.

The concluding day of summit also witnessed the findings from IFDI, developed in collaboration with the Islamic Corporation for the Development of the Private Sector, or ICD, the private sector development arm of the Islamic Development Bank, or IDB.

As per the analysis, the size of the Islamic finance industry globally was $1.35 trillion in 2012. This was based on a bottom-up analysis of disclosed financial statements of Islamic institutions. The largest components of the industry were Islamic banking with $985 billion in assets, and sukuk with $251 billion.

Russell Haworth, managing director, Middle East & North Africa, Thomson Reuters, said: “The IFDI’s findings demonstrate the size and breadth of the Islamic finance economy and will serve as a critical reference point for its growth going forward. The ability to accurately size the Islamic finance industry, based on disclosed financial information as opposed to assumptions and conjecture, is key to providing meaningful analysis aimed at developing the industry.”

The findings also highlighted that Malaysia was the largest Islamic finance economy, with total Islamic finance assets of $412 billion and has the largest sukuk market, valued at $171 billion and the second largest Islamic banking market, valued at $194 billion.

The Saudi Arabia was second in terms of Islamic finance assets, with assets of $270 billion and the Kingdom also has the largest Islamic banking market, with total Islamic banking assets of $217 billion. Further there are 1,003 financial institutions operating in the Islamic finance space.

“Accurate information on the size of Islamic financial industry, its institutions and performance, based on bottom up analysis, is one of the key outputs of IFDI. Unlike other sources that are focused on specific countries or regions, or utilise sample testing and assumptions to develop their estimates, the IFDI provides accurate information on the entire Islamic finance space and its sub-components,” added Al Aboodi.