Development, Growth and Challenges of Islamic Capital Markets: Comparative Insights from the Malaysian, Indonesian, United Arab Emirates and Brunei Markets

2013 ◽  
Vol 1 (3) ◽  
pp. 100 ◽  
Author(s):  
Syed Faiq Najeeb ◽  
Mirza Vejzagic
Keyword(s):  
United Arab Emirates ◽  
Capital Markets ◽  
Islamic Finance ◽  
Local Authorities ◽  
Muslim Population ◽  
Finance Industry ◽  
Societal Welfare ◽  
Significant Interest ◽  
Current Growth ◽  
Future Plans

Despite initiatives and discussions in many countries to introduce Islamic capital markets, the share of non-banking assets in the global Islamic finance industry remains small. Islamic banking continues to dominate the Islamic finance portfolio with a gigantic 80.9% contribution towards the total Islamic finance assets as at year end 2011. Based on such statistical reality, one may wonder, what are the current growth and development trends of Islamic Capital Markets (ICMs)? To this end, this paper assesses the development, growth and challenges of Islamic Capital Markets in Malaysia, Indonesia, United Arab Emirates, and Brunei and critically analyses the fundamental factors that contribute towards the liquidity, volume and trends of the Islamic Capital Markets in these countries. Using Malaysia as a benchmark, this paper provides a comparative analysis on the performance of the various sectors of Islamic capital markets such as equity markets, debt markets, fund management markets, liquidity markets, etc. amongst the four sample countries. In addition, the paper examines the local authorities? initiatives? and future plans for firmly establishing Islamic Capital Markets in their jurisdictions and further recommends potential policies that could be introduced to maximize economic gains and societal welfare from Islamic Capital Markets for the Muslim population in general. Overall, the findings from the paper are expected to attract significant interest from Islamic finance stakeholders, in particular to understand how local authorities and other players could possibly be instrumental in shaping the development of Islamic Capital Markets.

scholarly journals Sukuk Default Regulation in Malaysia and United Arab Emirates: Comparative Analysis

2019 ◽  
Author(s):  
International Journal of Fiqh and Usul al-Fiqh Studies
Keyword(s):  
Comparative Analysis ◽  
United Arab Emirates ◽  
Capital Market ◽  
Regulatory Framework ◽  
Court Decision ◽  
Islamic Finance ◽  
Moral Hazards ◽  
Finance Industry ◽  
Market Framework ◽  
The Right

The nascent Islamic finance industry is still facing the challenges of uncertainties in legal regimes, Sharī’ah interpretations, the right of investors, and remedies in default circumstances. The event of Sukūk default is one of the significant challenges faced by the Islamic capital market. The recent Dana Gas Sukūk default triggered by Sharī’ah compliance interpretations has shown the extent of danger that moral hazards could cause to the entire Islamic finance space. Scholars have argued that the Sharī’ah-compliant arguments witnessed in the industry were because of the nature of the capital market framework of any particular jurisdiction and were not significantly Sharī’ah issues. This study aims to carry out a brief comparative analysis of the default cases in Malaysia and the United Arab Emirates (UAE). The study compares the legal jurisdiction and regulatory framework in summary-background of the judges and court decision samples based on these structures and how they have influenced Sukuk default regulations in the jurisdiction. This study employs a comparative analysis by considering fundamental elements in the regulatory framework.

scholarly journals Islamic Financial Law and the Law of the United Arab Emirates: Disjuncture and the Necessity for Reform

2019 ◽  
Vol 33 (2) ◽  
pp. 152-178
Author(s):  
Jonathan George Ercanbrack
Keyword(s):  
United Arab Emirates ◽  
Islamic Finance ◽  
Legal Systems ◽  
Recent Event ◽  
Investor Confidence ◽  
Finance Industry ◽  
The Law ◽  
Relationship Of ◽  
The Relationship ◽  
Securities Laws

Abstract Islamic financial law (IFL), an emerging global legal order, is a highly fragmented law comprised of both state and non-state generated laws, standards, commercial practices, institutions, fatwās and legal ideas. A recent event involving ṣukūk issuance in which Dana Gas claimed that its ṣukūk were no longer Sharīʿah-compliant highlights the legal disjuncture between global IFL and the laws of municipal legal systems, which have chosen to facilitate and regulate Islamic finance. Systemic legal issues or ‘legal gaps’ undermine investor confidence and impede sustainable development of the Islamic finance industry. Legal gaps include but are not limited to undeveloped securities laws, enforceability issues and a lack of clarity with respect to the role and effect of the Sharīʿah in the municipal legal systems of many MENA (Middle East/North Africa) states. This paper analyses these gaps and in so doing illustrates the relationship of IFL to the law of the United Arab Emirates.

The UAE and Responsible Finance—Can Responsible Finance Ṣukūk Help the UAE in Fulfilling Its Sustainability Ambitions?

2020 ◽  
Vol 34 (4) ◽  
pp. 313-355
Author(s):  
Edana Richardson
Keyword(s):  
United Arab Emirates ◽  
Capital Markets ◽  
Economic Activity ◽  
Islamic Law ◽  
Islamic Finance ◽  
Market Participants ◽  
Sustainable Economy ◽  
Sustainability Initiatives

Abstract Responsible finance ṣukūk provide market participants with a capital markets instrument through which they can fulfil the dictates of Islamic law while also participating in green, social or sustainable economic activity. However, as centres for Islamic finance (such as Malaysia and Indonesia) become prominent markets for responsible finance ṣukūk, issuances of these instruments have been noticeably slower to develop in the United Arab Emirates (UAE). This has not been due to a lack of public enthusiasm for a sustainable economy from UAE authorities. However, the plethora of government sustainability initiatives, statements and targets has resulted in somewhat of a patchwork of policies, not all of which are publicly available or centrally curated. This article will aim to map the UAE’s sustainability agenda and consider where responsible finance ṣukūk fit within this agenda. Against this backdrop, it will analyse the contractual structure of the UAE’s first issuance of responsible finance ṣukūk.

A bibliometric analysis of quality research papers in Islamic finance: evidence from Web of Science

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Bashir Tijjani ◽  
Murtaza Ashiq ◽  
Nadeem Siddique ◽  
Muhammad Ajmal Khan ◽  
Aamir Rasul
Keyword(s):  
Bibliometric Analysis ◽  
United Arab Emirates ◽  
Web Of Science ◽  
Arabic Language ◽  
Quantitative Information ◽  
Islamic Finance ◽  
Content Type ◽  
Finance Industry ◽  
The World ◽  
The Usa

Purpose The purpose of this study is to provide quantitative information on the growth of Islamic finance literature. The study focused on publishing trends, countries producing research on Islamic finance, key authors, major contributing organizations, authorship patterns, keywords and articles with the highest citations. Design/methodology/approach Bibliometric analysis is applied to analyse the growth and publishing trends in Islamic finance literature. The Web of Science (WoS) database was used to extract bibliometric data covering the period 1939–2019 for Islamic finance literature. Findings The study finds that Islamic finance research has gained remarkable momentum in the literature. However, such growth is largely manifested in Malaysia because of a conducive atmosphere for this type of research. Interestingly, the study finds that the three most productive journals are located in the UK and Malaysia, while Professor M. Kabir Hassan from the University of New Orleans, the USA appears to head the list of authors with 23 publications on Islamic finance. Practical implications This study provides up-to-date literature on the current state of Islamic finance in the world; as a result, it supports the development of policies by the Islamic finance industry. The findings of the study also serve as a reference point for Islamic finance training and educational institutions. Originality/value Islamic finance is an emerging financial discipline; as such, there is a need for more awareness of this financial system in the world. Muslim-majority countries, especially Saudi Arabia, Turkey, Indonesia, the United Arab Emirates (UAE), Pakistan and Bahrain, have to include Islamic finance in their curriculum and establish research institutions and research journals. In addition, Arabic language journals should be indexed in WoS and/or Scopus to provide a high-quality publication platform. This study provides a more comprehensive bibliometric analysis on the growth of Islamic finance literature (1939–2019) in the WoS database; most of the prior studies have covered relatively few areas of focus and a lower range of years in some cases.

Part II Islamic Law and Contracts in Practice, 11 Sukuk

2020 ◽  
Author(s):  
Hanif Atif ◽  
Johansen Julian ◽  
Richardson Edana
Keyword(s):  
Capital Markets ◽  
Islamic Law ◽  
The State ◽  
Islamic Finance ◽  
Complex Structures ◽  
Finance Industry ◽  
High Profile ◽  
Debt Capital ◽  
Key Driver

This chapter focuses on the sukuk market, which represents one of the more high-profile elements of the Islamic finance industry. Over the last two decades, the sukuk market has been a key driver behind the growth of Islamic finance globally, with the state of the sukuk market often seen as a barometer for the health of the wider Islamic finance market. However, the sukuk industry has also had its own specific hurdles to overcome. Internal scepticism, a multitude of complex structures, and legislative restrictions have all contributed to the current shape of the sukuk market. While this market may never challenge the conventional debt capital markets in terms of size or accessibility, it remains a key aspect of the Islamic finance industry generally and offers an important Shari’a-compliant resource for issuers and investors.

General Takaful claims: An experience of Takaful operator in Malaysia

2017 ◽  
Vol 5 (4) ◽  
pp. 18
Author(s):  
Amirul Afif Muhamat ◽  
Mohamad Nizam Jaafar ◽  
Sharifah Faigah Syed Alwi
Keyword(s):  
Life Insurance ◽  
Islamic Finance ◽  
Rigorous Analysis ◽  
Finance Industry ◽  
General Insurance ◽  
Bright Side ◽  
Main Components ◽  
Islamic Insurance ◽  
Gathering Data ◽  
Observation Period

Takaful is interchangeably referred as Islamic insurance. In Malaysia, the takaful sector is part of the main components for Islamic finance industry. The business can be divided into two: general and family takaful. To ease understanding on this niche sector; general takaful is comparable to general insurance while family takaful is akin to life insurance with special reference needs to be given on the requirement of the business to adhere to the Islamic precepts. The main business in general takaful is motor takaful and this line of business is faced with high takaful claims. This study appraised the factors which affect the general takaful claims based on the experience of one takaful operator in Malaysia (the name of takaful operator is not disclosed due to confidentiality). The factors are: number of claims; fraud; and coverage for protection. The limitation of this study is that the observation period is only 10 years which limits rigorous analysis to be done. Nevertheless, previous studies in this area depict the same limitation – constraint in gathering data that has long observation period. On the bright side, the data in this study is still capable to produce meaningful results to be referred with regards to this issue – general takaful claims.

Religiosity, Neglected Risk and Asset Returns: Theory and Evidence from Islamic Finance Industry

2019 ◽  
Author(s):  
Saad Azmat ◽  
Haiqa Ali ◽  
A. S. M. Sohel Azad ◽  
M. Kabir Hassan
Keyword(s):  
Asset Returns ◽  
Islamic Finance ◽  
Finance Industry

Legal Origin, Institutional Quality, and Islamic Finance Development: Does Shari’a Matter?

2020 ◽  
Vol 13 (2) ◽  
pp. 345-369
Author(s):  
Rihab Grassa
Keyword(s):  
Financial Development ◽  
Legal System ◽  
Civil Law ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Financial Industry ◽  
Legal Origin ◽  
Muslim Population ◽  
Legal Origins ◽  
Shari'a Law

AbstractPrevious studies on financial development have shown that differences in the legal origin explain differences in financial development. Using historical comparisons and cross-country regressions for 40 countries observed for the period from 2005 to 2018, our research assesses how different legal origins have affected the development of Islamic finance worldwide. More particularly, our research assesses empirically why and how the adoption of Shari’a, wholly or partially (combined with common or civil law), could explain the level of development of Islamic finance in different jurisdictions. Our primary results show that countries adopting a Shari’a legal system have a very well-developed Islamic financial system. Moreover, countries adopting a mixed legal system based on common law and Shari’a law have sufficient flexibility within their legal systems to make changes to their laws in response to the changing socioeconomic conditions, and this has helped the development of the Islamic financial industry. However, countries adopting a mixed legal system based on both civil law and Shari’a law appear less flexible in making changes to their old laws and this thwarted the development of the Islamic financial industry in these countries. Furthermore, we have found that the concentration of a Muslim population (the percentage of Muslim population) along with the level of income have both had a positive effect on the development of Islamic banking assets and on the development of Islamic banking as a whole.

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