Participation Finance, mostly referred to as Islamic Finance, Equity-based Finance or Profit and Loss Sharing Finance, is a financial system where the financial institutions offer financial services based on the principle of shared risk and reward. A growing body of literature argues that, implemented fully, Participation Finance is more stable, equitable, inclusive and growth-friendly, and therefore, can better serve sustainable development.
The global growth of Participation Finance, on the other hand, continued its fast-track trajectory over the past years despite the uncertainty in the health of the global financial system. Worldwide, the assets of participation finance --about $1.4 trillion at year-end 2011-- are likely to continue their impressive streak of double-digit growth in the coming years. As the industry matures, equity-based instruments of Participation Finance are becoming specific asset classes in their own right. The expansion of this emerging market in both depth and breadth, implied by both the increase in the number of new entrants and the growing sophistication of existing players, is likely to pave the way for the coming of age of a truly global Participation Finance industry.
As the primary research and training organ of the Organisation of Islamic Cooperation (OIC), SESRIC is fully dedicated to the advancement and welfare of its member countries through developing implementable and research-based policies and technical cooperation programmes. To that end, the Centre is an active contributor to the development of Participation Finance in OIC member countries through a broad spectrum of activities including, inter alia, various international academic and practitioner events, landmark industry projects, as well as technical research studies. The Centre is also engaged through an intensive cooperation agenda with various multilateral development and standard-setter institutions specialized in Participation Finance.