TRADE & FINANCE
gas, wheat, rice, and cotton. They are
also among the world’s largest importers
of food and agricultural products, various
consumer goods as well as machinery
and equipment.
Moreover, evidence shows that Islamic
finance could be more resilient to external
shocks than conventional finance. This is
because of the emphasis on risk sharing,
which reduces leverage and leads to
better risk management. Islamic finance
is also based on ethical principles that
prohibit speculation and exploitation.
With these values, Islamic finance has the
potential to strengthen financial and social
stability, and foster comprehensive and
inclusive human development. Table 1. Islamic Trade Finance Products
IsDB’s role in promoting trade finance
The importance of trade finance as a key
driver of economic growth. Trade finance
has always been one of the main areas of
the IsDB Group’s operations, and despite
a dramatic contraction in global trade
flows in recent years, the IsDB Group has
remained very active in this area. The cumulative trade financing approvals of
the IsDB Group stood at US$ 61.4 billion,
with intra-OIC trade financing accounting
for more than 70% of the total.
The IsDB was the first international
development institution to adopt a
program to finance trade and to promote
trade between its member countries.
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Import Financing Export Financing
Documentary Credit
Wakalah
Murabahah
Musharakah
Shipping Guarantee
Murabahah Working Capital
Islamic Bankers Acceptance
Foreign Inward Bills for collection
(FIBC-i) Inward Letter of Credit
Islamic Factoring
Islamic Bankers Acceptance
Islamic Credit Export Financing
Islamic Export Credit Re-financing
(pre-shipment)
Islamic Export Credit Re-financing
(post-shipment)
Accepted Bills-i
Foreign Outward Bills for Collection- i
Domestic Outward Bills for Collection-i
Debt Trading Working Capital Financing
Domestic inward Bills for collection
(DIBC-i)
Source: MIFC
In this context, the Bank established
the International Islamic Trade Finance
Corporation (ITFC) and the Islamic
Corporation for the Insurance of
Investment and Export Credit (ICIEC)
to promote the economic development
of member countries through the
expansion of international trade.