Islamic Finance Market Size (2024 - 2030)

As per our research report, the Islamic Finance Market size is estimated to be growing at a CAGR of 10.2% from 2024 to 2030.

KEY MARKET INSIGHTS:

 Islamic Finance comprises an array of services that meet the terms of Shariah rules and offer interest-free substitutes. It consists of a range of financial bodies and instruments that provide goods and services such as Islamic banking, Islamic bonds, and Islamic Insurance (takaful).

• The Islamic Financial Industry has translated rapidly in recent years. With strong market penetration especially in North America, Europe, and Africa, the market is reaching far and beyond traditional Muslim-majority countries.

• The Islamic banking business has been majorly driven by the increasing Muslim population, continuous surge in disposable incomes, and an amplified desire for financial inclusion. Furthermore, the growing emphasis on ethical and sustainable investments on a global scale has created favorable conditions for the growth of the Islamic finance sector. Additionally, the Islamic finance sector has seen noteworthy development in its market share due to its keenness to product innovation and diversity. Greater financial inclusion has been made possible by the improvement and addition of a wide range of Shariah-compliant financial implements and services as well as the incorporation of technology.

• Product innovation can escalate the consumer base that complies with Shariah laws. It is vital to incorporate technology to use creative financial solutions and improve operational effectiveness, and customer experience. Furthermore, new growth opportunities are presented by investors' increasing interest in the adoption of Islamic financial concepts.

• However, despite its speedy expansion, the Islamic finance sector still has several difficulties in front of it. A key obstacle is the absence of Shariah-compliant resources and the intricacy of risk assessment and management procedures. Furthermore, the reliance on particular economic sectors and a small pool of investors may add to the list of the challenges the market poses.

• The Islamic financial sector faced both positive and negative repercussions as a result of the COVID-19 outbreak. Firstly, investor sentiment and prices were affected deeply by the increased market volatility and the economic downturn. But the pandemic also exposed how resilient Islamic banking ideas are. During the emergency, the industry's importance on social responsibility and community welfare gained eminence, which raised the demand for financial solutions for healthcare, social welfare, and economic recovery that abided by Shariah rules.

• Based on the type of institutions, the Islamic Finance Market can be segmented into - Islamic Banks, Islamic Insurance (Takaful) Companies, Islamic Asset Management Firms, Islamic Investment Banks, and Islamic Microfinance Institutions. Islamic banks offer a full range of Shariah-biddable services. They've developed refined alternatives to traditional banking products for trade finance and ijara for asset backing.

• Based on the product type, the Islamic Finance Market can be segmented into – Islamic Banking Products, Islamic Capital Market Products, Islamic Insurance (Takaful), Islamic Microfinance, and Others (Islamic Wealth Management). Islamic capital market products are experiencing a tremendous growth rate, due to the increasing sophistication in the Islamic finance industry. Although, traditional Islamic banking products hold dominance and have the majority of the market share. These products profit from clear supervisory guidelines and standardized certification, making them easier to implement across different markets.

• Based on the Customer Segments, the Islamic Finance Market can be segmented into –

• Individual Consumers, Small and Medium Enterprises (SMEs), Large Corporations, Government Entities, Institutional Investors, and Non-Profit Organizations. The individual customers segment shows significant growth potential during the forecast period. The increasing interest in ethical finance is driving non-Muslim customers who appreciate the moral ideas underlying Islamic banking. Large Corporations hold the majority of the total market share.

• Based on the Region, the Islamic Finance Market can be segmented into – North America, Europe, Asia Pacific, South America, and Middle East and Africa. The Middle East and Africa region dominates the Islamic finance market landscape. Saudi Arabia, UAE, and Qatar are leading this region's growth, due to strong regulatory frameworks supporting Islamic banking principles and ideologies. Asia-Pacific region is projected to showcase the highest growth rate due to rapid transformation, increasing middle-class population, and liberal regulatory environment.  

Islamic Finance Market Segmentation:

By Type of Institutions:

• Islamic Banks

• Islamic Insurance (Takaful) Companies

• Islamic Asset Management Firms

• Islamic Investment Banks

• Islamic Microfinance Institutions

By Product Type:

• Islamic Banking Products

  • • Profit-Sharing Accounts (Mudaraba)

    • Cost-plus Financing (Murabaha)   

    • Islamic Mortgages (Diminishing Musharaka)

    • Trade Finance

    • Working Capital Financing

    • Project Financing

    • Leasing (Ijarah)

• Islamic Capital Market Products

  • • Sukuk (Islamic Bonds)

    • Islamic Equity Funds

    • Islamic Real Estate Investment Trusts (REITs)

    • Islamic Exchange-Traded Funds (ETFs)

• Islamic Insurance (Takaful)

  • • Family Takaful

    • General Takaful

    • Medical Takaful

    • Endowment Takaful

    • Others (like Travel Takaful, Motor Takaful)

• Islamic Microfinance

  • • Microfinance Institutions adhering to Islamic principles

    • Qard Hasan (Benevolent Loans)

• Others (Islamic Wealth Management)

By Customer Segments:

• Individual Consumers

• Small and Medium Enterprises (SMEs)

• Large Corporations

• Government Entities

• Institutional Investors

• Non-Profit Organizations

By Region:

• North America

• Europe

• Asia-Pacific

• South America

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