IMF study sees banking holes threatening growth of Islamic finance

Islamic banks have yet to devise strategies for attracting large swathes of the global Muslim population, limiting the industry's prospects, according to researchers at the International Monetary Fund. Growth of Shariah-compliant finance has done little to boost inclusion for individuals and businesses without bank accounts, a working paper from staff at the Washington-based fund said this month. Banks need to focus on small- and medium-sized enterprises and pursue private equity and venture capital initiatives, according to the paper. While the IMF's researchers found that Islamic banking within OIC countries was associated with greater use of bank credit by households and by firms for investment, it said there was no significant effect on other indicators of credit use.