Islamic Finance and Economic Development: Lessons from the Past, Prospects for the Future

Occasional Paper No. 370

The Study starts by asking some fundamental qustions as to what role Islamic finance can play in socio-economic development, how similar or different it is from the conventional finance, and how its effectiveness can further be enhanced. The study analyzes the channels of impact of Islamic finance on real economic activities and, using Islamic finance in various sub-sectors of the economy. The study also covers aspects of resource mobilization and sound development of Islamic financial sector progress. The mission and objectives of the IDB group are noble. The study highlights the ways in which the IDB provides development assistance and sets out a framework to draw lessons in using Islamic finance for economic development.