The Islamic finance market has grown by as much as 20 per cent each year for the past six years and is now a $700 billion plus industry, according to State Street.

The firm's latest Vision Report on the subject estimated that total assets under management by Islamic financial institutions is over $700 billion.

"Against a backdrop of a challenging global environment, Islamic finance is emerging as a competitive form of intermediation in the international financial system and it has a key role to play in restoring confidence in the markets," said Rod Ringrow, senior vice president at State Street.

While the market continues to grow, the report found the number of products available is still narrow. Many of the new products entering the market are Shariah compliant, which means products follow a strict moral and ethical code.

"The tenets of Islamic finance - lower leverage, transparency and no speculation - make it an attractive investment option in any market environment, especially today's," he said.

"To date, the global financial crisis has had a limited effect on Islamic finance as investors seek out asset classes and markets they hope will provide stability."

Ringrow said State Street believes the Islamic finance market will respond to the current crisis with more products that offer greater variety and sophistication for a number of complex cross border transactions.