Islamic Windows and the Evolution of Financial Intermediation 

This paper examines Islamic banking windows as a key model in the evolution of Islamic financial intermediation. It explains how windows were introduced to expand Islamic finance quickly by leveraging conventional banks’ infrastructure, especially in early-stage markets.

The study highlights their role in accelerating industry growth, with some windows eventually evolving into subsidiaries and full-fledged Islamic banks. However, it also discusses challenges such as weak Shariah governance, customer perception issues, and risks of fund misuse.

Finally, it presents the asset-side window model as an alternative approach suitable for central banks and development finance institutions. The paper concludes that Islamic windows remain an important but transitional mechanism for enhancing financial inclusion and supporting the development of Islamic finance.