Development of Islamic banking regulation in selected IDB member countries : a comparative analysis

Abstract EN

The paper compares standardization of regulations and standard-setting of Shari’ah-compliance for Islamic banking institutions in 13 Muslim and non-Muslim countries.

The findings suggest that the regulation for Islamic banking institutions in most countries is formulated in the image of conventional banking system.

Some countries lack proper legal framework with some notable issues includes the lack of a dedicated Islamic banking law with few laws relating to corporate governance.

However, most of the countries follow regulation of their domicile and International Accounting Standards (IAS) with some countries are adopting Islamic accounting standards.

The paper also suggests that due to various difficulties to harmonize Islamic banking practices, facilitating cluster or regional regulations and practices may be the first step towards greater harmonization of the Islamic banking system.