Analysis of Islamic Capital Market-Products and Challenges: A Case Study of Pakistan

Abstract

Global financial meltdown-2008 brought attention of states and market participants towards asset based Islamic Financial System (IFS). Global financial crises-2008 was not only the debt crises but actually it was the collapse of conventional system that caused surge in Sharia complaint products demand by many folds from every corner of the world. Pakistan where Islamic banking started to came in limelight after 2001 when old Islamic banking procedures were announced NULL and VOID by sharia court and SBP set new road map for next 20 years for Islamic Banking in Pakistan. Islamic Capital market (ICM) also started its growth with rising Islamic bank (IBs) deposits and financing. This paper investigates the ICM products to maximize its growth and challenges. This study is based on review of previous papers and analysis of available data on ICM business from annual reports of PSX, NCCPL, CDC, SECP and PSX brokers. The study found that itis still needed to work for the sustainable growth of ICM in Pakistan as the sector has witnessed very low growth Specially equity market as compared to improvement of IBs during last 8 years.