FROM ASSETS TO IMPACT: THE RISE OF ISLAMIC FINANCE IN A GLOBAL ECONOMY

In recent years, Islamic finance has emerged as one of the most interesting forces in global markets. With assets approaching $3,88 trillion in 2024, and a 14,9% annual growth rate, it is attracting large sums of capital, whether it is from the 2 billion muslims in the world, ethical investors, the Gulf Cooperation Council’s sovereign funds, which manage nearly a third of global sovereign funds’ assets, or new projects in developing economies. 

Islamic finance is proving itself not just as an alternative investment model, but as a strategic tool capable of reshaping international capital flows and influencing the evolving global financial landscape.

These dynamics unfold within a context of growing economic interdependence among Global South countries, where Islamic finance is emerging as a preferred channel for South-South trade and investment. By relying on asset-backed instruments, risk-sharing structures, and reduced dependence on dominant currencies like the dollar, Islamic finance has become not just an ethical alternative, but a strategic lever in today’s geoeconomic transformations.

In this system, financial instruments are more than mere speculation tools, they are contracts linking capital, labor, and the real economy. Participatory models like Mudarabah and Musharakah allow investors and entrepreneurs to share profits and losses, replacing fixed-interest logic with shared risk. Operational tools such as Murabaha and Ijara finance goods and productive activities through transparent sales and leasing contracts, ensuring predictable cash flows without relying on debt interest. Connecting the system to global markets are Sukuk,asset-backed securities that fund infrastructure and large-scale projects. According to the Global Islamic Services Industry Stability Report 2025 of the IFSB, Sukuk emissions in 2024  have grown over 25,6% . Together, these instruments create a framework in which returns stem from tangible economic activity rather than speculation, making Islamic finance an increasingly influential model well beyond its traditional markets.

Islamic finance challenges the rules of conventional Western finance, emphasizing transparency, risk-sharing, and direct ties to real assets. Unlike traditional systems, where loans and interest generate returns regardless of project success, Islamic finance links profits to the actual performance of underlying activities. Instruments like Mudarabah and Musharakah require investors and managers to share both gains and losses, reducing debt risk and encouraging more prudent decision-making.

This approach also enhances stability during crises: tangible assets and participatory contracts limit exposure to highly speculative instruments and excessive leverage, making markets less vulnerable to systemic shocks. At the same time, reliance on real assets demands careful risk assessment and disciplined investment management.

Challenges remain, however. International accounting and regulatory standards, designed for debt- and interest-based markets, struggle to properly measure participatory instruments like Sukuk or Musharakah, complicating global comparability and the integration of this alternative financial system.