Given the success of IBF and the growing prominence of Islamic financial institutions, there is an emerging interest in ranking the countries where IBF flourishes. GIFR has been publishing Islamic Finance Country Index (IFCI) since 2011, which ranks about 40 countries in terms of their significance and potential with respect to IBF. However, country leadership in IBF has different dynamics altogether than leadership of cities in this field. While the former is driven by market size (e.g. population and economic size in terms of GDP), the latter is largely determined by factors like international linkages and financial infrastructure.
According to Global Islamic Finance Report 2015, the top 5 Centres of Excellence in Islamic Banking and Finance are:
- Kuala Lumpur – Malaysia
- Manama – Bahrain
- Dubai – UAE
- London – United Kingdom
- Doha – Qatar
What makes a city merit to be recognised as a global centre of excellence (CoE) for IBF? Four main factors come into play when determining the leadership role of centres of excellence in IBF.
- Islamic financial advocacy. This is perhaps the most important factor. A city’s advocacy role in promoting IBF is key. This includes creating public awareness and full commitment in bringing about action to develop Islamic finance as a viable financial system.
- Financial infrastructure. Any city can claim to be a CoE for IBF but without developing an enabling environment it cannot attract serious players in the Islamic financial services industry. For example, Kuala Lumpur succeeded in attracting a number of global players in IBF largely because of developing a one-window solution (i.e., Malaysia International Islamic Financial Centre (MIFC)) to facilitate entry of foreign Islamic investment banks and asset management companies.
- Qualified and competent personnel for IBF are key to development of a progressive Islamic financial community. This is why availability of human resources and institutional endeavour for talent development are crucial factors for a successful CoE for IBF. A CoE not only produces qualified talent but also are able to attract top talent needed to push the development of Islamic finance.
- International linkages are important drivers of IBF growth. International linkages are determined not only by the geographical locations but the ease with which people can travel to and from such cities. London and Dubai are on top of the list of the cities important to IBF in terms of international linkages
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