Similarly, as we now know, the risk disclosures of various structured financial instruments were inadequate to permit purchasers of those instruments to perform a proper assessment of the risk/reward trade-off. Many investors purchased assets which they believed to have a very different risk profile than turned out to be the case. Again, there are parallels with Islamic finance.
The use of off-balance sheet special purpose vehicles has been a feature of the financing model of many Islamic banks. We need to consider whether this gives rise to the same problem of a lack of transparency that arose with off-balance sheet SIVs. Similarly, accounting standards for Islamic finance need to keep pace with financial innovation.