Innovation: Downturn temporarily blunts inventiveness (Islamic Finance Special Report 4:4)

Modern Islamic banking may be less than four decades old, but scholars, bankers and lawyers have melded modern finance and centuries-old sharia law into a multitude of products, structures and services that replicate many conventional financial structures while adhering to ancient Muslim economic principles.

Now, global financial upheaval has blunted the innovation drive. Scholars are reviewing products developed in recent years, some of which, they feel, have been allowed to drift too far away from the guiding principles of Islam.

Meanwhile, bankers have more pressing concerns – such as the quality of their loan book and investments – than devising products.