Saudi Arabia is the second largest Islamic finance economy globally with assets worth $270 billion, according to a new report.

The Kingdom also has the largest Islamic banking market with total assets of $217 billion, said a report by Thomson Reuters, the world's leading provider of intelligent information for businesses and professionals.

Globally, Malaysia dominates the Islamic finance market with total assets worth $412 billion, stated Thomson Rueters in its latest 'Islamic Finance Development Indicator (IFDI)' developed in collaboration with the Islamic Corporation for the Development of the Private Sector (ICD), the private sector development arm of the Islamic Development Bank (IDB).

Officially launched today at the Global Islamic Economy Summit in Dubai, the indicator measures five key components - quantitative development, governance, social responsibility, knowledge and awareness.

As per the report,, Malaysia has the largest sukuk market, valued at $171 billion and the second largest Islamic banking market, valued at $194 billion.

The IFDI report put the size of the Islamic finance industry globally at $1.35 trillion as of 2012. This was based on a bottom-up analysis of disclosed financial statements of Islamic institutions.

The largest components of the industry were Islamic banking with $985 billion in assets, and sukuk with $251 billion, it stated.

According to the IFDI, there are 1,003 financial institutions operating in the Islamic finance space.

The IFDI, aims to expand the scope of Thomson Reuters' universe of Islamic finance content, research and news analysis and to develop an unbiased multi-dimensional barometer for the development of the Islamic finance industry.

Russell Haworth, the managing director, Mena, Thomson Reuters, said the IFDI’s findings demonstrate the size and breadth of the Islamic finance economy and will serve as a critical reference point for its growth going forward.

"The ability to accurately size the Islamic finance industry, based on disclosed financial information as opposed to assumptions and conjecture, is key to providing meaningful analysis aimed at developing the industry," he noted.
 
Analysis did not take into account undisclosed Islamic assets, therefore the total value of the industry could be 10 to 20 per cent higher than estimates, added Haworth.

Khaled Al-Aboodi, the chief executive officer of ICD said accurate information on the size of Islamic financial industry, its institutions and performance, based on bottom up analysis, was one of the key outputs of its Islamic Finance Development Indicator.

"Unlike other sources that are focused on specific countries or regions, or utilise sample testing and assumptions to develop their estimates, the IFDI provides accurate information on the entire Islamic finance space and its sub-components," he added.

Dr Sayd Farook, the global head of Islamic Capital Markets for Thomson Reuters, said: “Our sizing of the industry is unique in that each dollar is accounted for, and we have minimized subjectivity and bias. This will provide policy makers and practitioners with the precise information that they require to develop the industry in their local markets.”-TradeArabia News Service