Standardization Efforts in Islamic Finance

The growing number of Islamic financial institutions (IFIs) across jurisdictions and the sophistication of Islamic Finance instruments require standardizations or at least harmonization1 of Islamic Finance contracts and services to regulate the markets in order to promote their transparency and improve their stability and ultimately create a fair and equitable financial system. As part of this effort, several international Islamic standard-setting organizations (SSOs), including the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), the Islamic Financial Services Board (IFSB), and the International Islamic Financial Market (IIFM), have issued numerous standards covering Sharīʿah products, Sharīʿah governance including ethics-related standards, and Islamic accounting and auditing. Consequently, the guidelines and resolutions are introduced at the local level.