"We are committed to serving the sector by addressing several pressing issues that the industry is facing today. The research collaboration with the World Bank is yet another step in this direction," said Al Baraka's Group President and Chief Executive Adnan Ahmed Yousif.
Abayomi Alawode, Head of Islamic Finance at the World Bank, said that the priority is to create an environment where the profit-and-loss system can flourish. "After a series of discussions with Al Baraka's Executive Management and Research Team, we recognise that the industry must address concerns that the majority of Islamic banking assets are debt-based and that the proportion of equity-based investments (such as musharakah and mudarabah) does not form a significant portion of the Islamic investments portfolio. The enabling support system to mitigate these inherent risks and challenges is either limited or nonexistent. As a result, equity-based investments remain under-represented in the Islamic banking industry," he said.
Adnan Ahmed Yousif added, "Being the first of its kind, the research project will not only collect data from a number of countries where musharakah and mudarabah are being used in banking transactions, but the project will also examine what enabling legal and regulatory environment would be needed to support the adequate risk management of musharakah and mudarabah."
Alawode remarked, "We look forward to our collaboration with Islamic financial institutions, such as Al Baraka, drawing on their front-line experience in the use of Islamic financial products. Their insights will contribute to producing a study that will encourage innovation and contribute to the sustainable growth of the industry. The Islamic banking and financial industry has reached a level where further growth is possible, if it develops new tools and innovative products that address those core issues."
The Al Baraka Banking Group is a Bahrain joint stock company licensed as an Islamic wholesale bank by the Central Bank of Bahrain, and is listed on the Bahrain Bourse and the Nasdaq Dubai stock exchanges. The Group has a geographical presence in fifteen countries: Jordan, Tunisia, Sudan, Turkey, Bahrain, Egypt, Algeria, Pakistan, South Africa, Lebanon, Syria, Indonesia, Libya, Iraq and Saudi Arabia.
Abayomi Alawode, Head of Islamic Finance at the World Bank, said that the priority is to create an environment where the profit-and-loss system can flourish. "After a series of discussions with Al Baraka's Executive Management and Research Team, we recognise that the industry must address concerns that the majority of Islamic banking assets are debt-based and that the proportion of equity-based investments (such as musharakah and mudarabah) does not form a significant portion of the Islamic investments portfolio. The enabling support system to mitigate these inherent risks and challenges is either limited or nonexistent. As a result, equity-based investments remain under-represented in the Islamic banking industry," he said.
Adnan Ahmed Yousif added, "Being the first of its kind, the research project will not only collect data from a number of countries where musharakah and mudarabah are being used in banking transactions, but the project will also examine what enabling legal and regulatory environment would be needed to support the adequate risk management of musharakah and mudarabah."
Alawode remarked, "We look forward to our collaboration with Islamic financial institutions, such as Al Baraka, drawing on their front-line experience in the use of Islamic financial products. Their insights will contribute to producing a study that will encourage innovation and contribute to the sustainable growth of the industry. The Islamic banking and financial industry has reached a level where further growth is possible, if it develops new tools and innovative products that address those core issues."
The Al Baraka Banking Group is a Bahrain joint stock company licensed as an Islamic wholesale bank by the Central Bank of Bahrain, and is listed on the Bahrain Bourse and the Nasdaq Dubai stock exchanges. The Group has a geographical presence in fifteen countries: Jordan, Tunisia, Sudan, Turkey, Bahrain, Egypt, Algeria, Pakistan, South Africa, Lebanon, Syria, Indonesia, Libya, Iraq and Saudi Arabia.
Al Baraka is recognised as a pioneer in the Islamic banking sector for its thinktank, the Al Baraka Annual Islamic Banking Symposium (The Nadwa). The Nadwa is the only platform of its kind that annually provides the industry with resolutions and fatwas which form the basis of new products, standards and policies.