Tough choices for Islamic banking

Islamic banking is at a crossroads: it must now either integrate with the conventional financial infrastructure or relegate itself to the sidelines of world banking. Despite recent growth among Islamic financial institutions, pessimism remains regarding whether Islamic banks can compete with conventional banks. One obstacle that Islamic banks must continually overcome is the restrictions that Islamic law imposes on the types of products that can be provided. Islamic banks and Western banks, though, have still increasingly come to coexist and even cooperate, as seen particularly in Malaysia. Islamic banks are continually looking for innovative ways to compete with conventional banking. Some Islamic banks are looking to equity markets. Islamic banking will inevitably survive. The establishment of permanent Islamic capital markets nonetheless remains a difficult task.