The purpose of this paper is to examine the opportunities of Islamic finance in spurring economic development in Tunisia after the revolution of 2011. Precisely, this paper seeks…
Abstract
Purpose
The purpose of this paper is to examine the opportunities of Islamic finance in spurring economic development in Tunisia after the revolution of 2011. Precisely, this paper seeks to explore whether the Islamic banks-Sukuk markets relationships are more conducive of economic growth.
Design/methodology/approach
This work reviews the role of Islamic finance in economic development, examines the current dominance of Islamic banks on the saving-investment process and compares it with a situation characterized by a more important implication of banks in the Sukuk markets both as issuers and buyers.
Findings
This paper finds that the “marketable Islamic intermediation” provides easily more funds to finance the economic development and solve the problems of poverty and unemployment. It also reveals that Islamic intermediation can be improved by a more important implication of banks in the Sukuk markets. This permits to overcome many problems related to saving mobilization, bank liquidity management, risk taking and long-run investment.
Social implications
The author's recommendations related to the economic policy suggest strict rules to establish accountability, disclosure laws and transparency in Tunisia.
Originality/value
This paper is a first attempt to study the role of the relationships between Islamic banks and Sukuk markets in the economic development process. It stresses the importance of these relationships to better meet the requirements of development financing in Tunisia.