Regulating Islamic Financial Institutions: The Nature of the Regulated

This paper’s objective is a contribution to the clarification of the risks Islamic financial institutions (IFI) are exposed to and the type of regulation required to systemically manage them. In pursuing this objective, the paper considers that the industry is still in a development process whose eventual outcome is the convergence of practice with conceptual foundations. It consequently distinguishes, for analytical purposes, theoretical and practiced Islamic financial intermediation, the risks they present and the regulation they call for.