In recent months as the global financial crisis has deepened, many commentators have pointed out that Islamic financial institutions have escaped relatively unscathed from the severe downturn which is affecting most conventional financial institutions. This certainly presents the industry with an opportunity to continue its rapid and successful growth of recent decades.
However, the fact that Shari’a compliant institutions have avoided significant losses resulting from the global financial crisis does not mean that there are no lessons that they can learn from the fallout. Let me mention three in particular which I believe are particularly relevant – the risks of herding behaviour, the importance of liquidity management, and the importance of sound corporate governance.