وعده های امور مالی اسلامی: شواهدی از آفریقا
|کد مقاله||سال انتشار||تعداد صفحات مقاله انگلیسی||ترجمه فارسی|
|12084||2013||16 صفحه PDF||سفارش دهید|
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Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Review of Development Finance, Volume 3, Issue 3, July–September 2013, Pages 136–151
The objective of this paper is to improve understanding of the market for Islamic finance in Africa. Specifically the paper provides a mapping of Africa-based Islamic finance providers, quantifies the amount of foreign Islamic funding received by Africa and compares performance of African Islamic and conventional banks. We find that there are significant cross country variations in the way Islamic banking has been developed in Africa and in the type of services offered. Our empirical findings also support the superior efficiency of Islamic banks and suggest that Islamic banking could be beneficial for Africa.
Islamic financial institutions achieved annual growth rates in excess of 20% over the last decade, leading to an estimated market size of about USD 1.25 trillion in 2010 (The CityUK, 2011).1 This growth was mainly fostered by the innovative aspect of Islamic finance, reforms in regulatory and taxation frameworks aimed at accommodating Islamic financial activities, and efforts made to beef-up Islamic financial infrastructure geared towards ensuring better risk management and corporate governance. The origin of Islamic finance in Africa can be traced back to the 1960s with Egypt being the first African country offering Islamic banking under a low profile for political reasons (Aburime and Alo, 2009 and Mouawad, 2009). Several African countries followed suit which helped give raise to an African market for Islamic finance estimated at USD 37.5 billion as of 2008 (The CityUK, 2011). While this figure looks high at first sight, it remains negligible compared to the potential for Islamic finance in Africa estimated at USD 235 billion (Moody's, 2008). What's more, the market for Islamic finance in Africa is not only small in absolute terms but also in relative terms with African Islamic financial institutions holding less than 3% of global Islamic financial assets. The disparity between the current state of Islamic finance in Africa and its potential raises questions about constraints to the development of this type of finance. Lack of detailed information about Islamic finance providers in Africa and on the performance of African Islamic financial institutions further prevents a good understanding of this market. Indeed, research about the state and structure of the Islamic finance market in Africa is rather scant. The objective of this paper is to fill this gap in the literature by answering 3 questions. First, what does the market for Islamic Finance in Africa look like? The paper provides what we believe is the first comprehensive mapping of Africa-based Islamic finance providers. Second, to what extent does Africa benefit from international Islamic funding? Third, how do African Islamic banks perform compared to their conventional peers? The rationale for focusing on Islamic banks is twofold. First, banks represent the dominant players both in African financial systems and the global Islamic market.2 Hence, it is important to identify differences in performance related to the “Islamic” characteristic of banks as this could have policy implications to further develop financial sectors in Africa. Second, the market for Islamic non-bank financial institutions in Africa remains embryonic which makes any robust statistical analysis impossible. Our results show that the market for Islamic finance in Africa remains severely underdeveloped and counts only 116 providers from 21 countries. This number falls to 67 when Sudan, which carries a financial system that is Shariah-compliant, is excluded. Islamic banking is by far the most commonly offered Islamic finance service with 74 providers. This is consistent with patterns observed in the conventional African financial system and the global Islamic financial market. Yet, Islamic banking providers in Africa remain scarce and represent less than 10% of commercial banks operating in the 21 African countries offering Islamic financial services. Interestingly, Islamic banking has been developed using 2 different models in Africa. The first model consists in setting up fully fledged Islamic banks while the second model consists in setting up windows dedicated to Islamic finance within conventional banks. So far the first model prevails. We find that North Africa counts the largest number of Islamic finance providers but that East Africa is home to the largest number of Islamic banking providers. We attribute this trend to the flexible approach that regulators have been adopting in East Africa and which is conducive to innovation. We also document strong variations in the type of Islamic financial services available in African countries. While South Africa has been successful in developing Islamic investment funds, West African countries have been more successful in developing Islamic microfinance. Our research reveals also that Africa received at least USD 14 billion in Islamic project finance and USD 1.6 billion from Sukuk issuances on international markets over the period 2005–2012. While these amounts may look impressive at first sight, they remain negligible compared to the continent's needs. For instance, the annual funding gap for infrastructure alone is estimated at USD 93 billion. International Islamic funding is not only limited but is also concentrated on few countries. Project finance remains concentrated in North Africa which captured 82% of resources provided while Sukuk issuances remains limited to 3 African countries. Finally, our results suggest that Islamic banks in Africa are more stable as they report lower insolvency risk and higher returns on average assets. They also have lower non-performing loan (NPL) ratios but higher loan loss provisions. This result likely reflects the fact that Islamic banking transactions are backed by real assets giving very small room for speculation and lower NPLs. Our results suggest that Islamic banks adopt a prudent approach to provisioning to circumvent taking avoidable risks. These provisions are expected to help them to tide over the difficult times without affecting their normal banking operations in case of any large scale defaults. Our results also suggest that Islamic banks are more efficient. Our findings are robust to controls for country fixed effects and the share of assets held by the government in the banking sector. They also have strong policy implications for financial sector development in Africa as they tend to indicate a superior performance of Islamic banks which gives support to the development of such institutions in Africa. The remainder of the paper is organised as follows. Section 2 provides a mapping of the Islamic finance market in Africa while explaining the main identified trends. Section 3 describes Islamic funding flows that Africa was able to attract. In Section 4 we empirically investigate differences in performance between African Islamic and conventional banks while Section 5 concludes the paper.
نتیجه گیری انگلیسی
The objective of this paper is to improve understanding of the Islamic finance market in Africa. Specifically the paper provides what we believe is the first comprehensive mapping of the market for Islamic finance in Africa and the first quantitative assessment of foreign Islamic funding that benefited Africa. The last part of the paper empirically explores differences in the performance of African Islamic and conventional banks. Our mapping exercise reveals that Africa counts 116 institutions offering Islamic financial services: 74 institutions offering Islamic banking, 33 companies offering Islamic insurance (Takaful), 4 Islamic investment funds, and 5 institutions offering Islamic microfinance services. Over 40% of these institutions are located in Sudan which imposes compliance with Shariah on the entire financial sector. Overall, results show that the market for Islamic finance in Africa remains embryonic. Consistent with trends observed in the global Islamic finance market, Islamic banking dominates the African Islamic market, yet Islamic banking providers represent less than 10% of commercial banks operating in the 21 countries where Islamic finance is available. Islamic insurance is the second most developed segment with total premiums collected estimated at USD 540 million as of 2012. While North Africa emerges as the region counting the largest number of Islamic finance providers, it ranks second when it comes to Islamic banking which is more developed in east Africa. We attribute this trend to the flexible approach that East African regulators have been adopting. Such approach fosters innovation and may have facilitated the development of Islamic banking in the region. There are also strong cross-country variations in the type of non-banking Islamic finance services that have been developed. While West African countries have been developing Islamic microfinance and Takaful, these 2 services are not existent in Morocco. South Africa has been on the other hand more active in offering Islamic investment funds. We also show that Africa received about USD 14 billion in project finance from Islamic sources over the period 2005–2012, out of which USD 10 billion were provided by Islamic development finance institutions. The main beneficiaries of these resources were projects located in North Africa which alone captured about 82% of the funding provided. This is likely to be a reflection of the conducive environment that North African countries offer and cultural and religious ties with the countries providing Islamic resources. The financial sector was the main beneficiary of this funding followed by infrastructure. Yet, investments in the financial sector were not necessarily done in countries where financial sectors are most advanced such as South Africa and Mauritius. African sovereign and private entities raised also USD 1.6 billion in Sukuk over the period 2005–2013 Q2. While amounts received by Africa in the form of Sukuk or project finance may seem high at first sight, they remain negligible compared to the continent's needs. For instance, annual funding needs for infrastructure alone are estimated at USD 93 billion. The last part of the paper provides an empirical investigation of differences in business orientation, efficiency, asset quality and stability between African Islamic and conventional banks. We find that Islamic banks are more stable as they report lower insolvency risk and higher return on average assets. They also have lower NPLs and higher provisions. The result for NPLs is likely a reflection of the asset backed nature of Islamic banking while the result for the loan loss provisioning ratio suggest a conservative approach to provisioning for Islamic banks. We also find some evidence supporting the superior efficiency of Islamic banks. Our findings are robust to controls for government ownership in the banking sector and countries’ fixed-effects. While our results should be interpreted with caution given the small size of our Islamic bank sample, we believe that they present interesting facts that could be further explored in future research.