Structural Imbalances of the Islamic Financial Industry

Abstract

This article examines the structural parameters of the Islamic finance industry, including segmental asset distribution, geographic concentration, and market operating characteristics. The objective of the study is to assess the level of concentration and fragmentation as systemic imbalances that hinder the sustainable development of the industry. Using methods such as the analysis and systematization of statistical data, as well as a comparative analysis of segmental and regional shares, the article examines key industry proportions: the relationship between the banking sector, the sukuk market, and insurance; the distribution of assets by region and jurisdiction; liquidity indicators and sukuk spread characteristics as indicators of secondary market depth. Based on the results of the study, the article identifies three main types of imbalances: segmental hypertrophy of the banking sector with underdeveloped non-banking institutions (the share of banks is 71.6%, insurance — 1.4%); geographic concentration with the accumulation of 92.9% of assets in 17 systemically important jurisdictions; The disbalance between the volume of primary sukuk placements and the limited liquidity of the secondary market, manifested in widened spreads (from 0.22 to 0.63 depending on the instrument structure) and the predominance of short-term issues. The novelty of this study lies in its systematic description of the structural imbalances in the Islamic finance industry based on aggregated reporting data, which allows to draw a comprehensive picture of the industry’s institutional inadequacy. The results of this study can be used in developing strategies for the development of the Islamic financial sector at both the national and supranational levels.