Evidence suggests that financial development and improved access to credit not only accelerates economic growth, but also reduces household poverty and income inequality. Using Egyptian household survey data evidence it is found that a 1% increase in agricultural wages causes poverty to decline by 6.6%. Agricultural wage increases lead to the largest decrease in overall income inequality where a 1% increase in income from agriculture wages will cause overall inequality to fall by 0.049 percentage points: equivalent to a fall in the Gini coefficient by 18.8%. A regression analysis shows that receiving formal loans increases non-agricultural net revenues by 2.94 times whereas credit increases a household’s agriculture revenues by 2.08 times.

This paper analyses the main determinants of the diffusion and growth of the Islamic finance services industry (IFSI) globally. The boom in oil prices, producing surpluses in resource-rich countries with Muslim majorities and a preference towards investing in Shari’ah-compliant assets, boosted demand for Islamic financial services. The recent global financial crises and the Euro crises diverted attention to the need for more risk-averse vehicles for investment with asset backing both a prevalent feature of Islamic finance. Finally, the Arab Spring magnified the demand for Islamic financial services. However, the industry’s development, global diffusion and growth are challenged by many factors. Most importantly in the Shariah-compliant domain there is a lack of globally accepted standards for regulation and risk management, particularly for capital adequacy. The paper concludes that multilateral development banks (MDBs) can take a leading role in fostering the necessary global knowledge base and sharing global best practices to facilitate Islamic finance in achieving more efficient solutions to fighting poverty and boosting shared prosperity.