Islamic Capital Research Articles

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

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.

Islamic Capital Market Products in Post Revolution Countries: Case of Tunisia

This paper gives a discussion about the Islamic capital market products and it’s possible role to promote economy and foster financial stability to a post revolution country such Tunisia. The Islamic financial system as a part of the whole Islamic capital market is playing important roles in offering original modes of financing to both individuals and businesses. That’s why we are asking about the possibility to develop an Islamic capital market which will contribute to come out the economic difficulties of this country. This paper can be thought of as an indicator about the contribution of Islamic capital market products in promoting post revolution countries economies. To my knowledge it’s the first paper treating this problematic in order to give useful reflections to the interested in this domain of Islamic finance in these specific regions known by their revolutions climates.

Islamic Capitalism and Finance : Origins , Evolution and the Future

Contents: Foreword Introduction Part I: Value Systems Behind Institutions 1. Two Approaches to Islamic Economics and Finance 2. Basic Principles of Islamic Capitalism Part II: Historical Institutions of Private Enterprise: Capital Accumulation 3. Financing the Entrepreneur: The Medieval Islamic Business Partnerships 4. Evolution of Medieval Islamic Business Partnerships in the Islamic World and the West 5. Commerce and Commercial Institutions Part III: Historical Institutions of Capital Redistribution and Public Finance 6. Obligatory Redistribution of Wealth: Taxation and Institutions of Tax Collection, the Origins of Modern Sukuk 7. Voluntary Redistribution of Wealth (The Waqf) Part IV: Islamic Capitalism and Finance Today 8. Waqfs of Stocks 9. The Birth and Evolution of Modern Islamic Banking 10. Borrowing from the Public: Sukuk 11. Takaful (Islamic Insurance) 12. The Lembaga Urusan Dan Tabung Haji: Financing the Modern Pilgrimage Part V: Future of Islamic Capitalism and Finance 13. The Islamic Gold Dinar 14. Maqasid Al-Shari'ah and Islamic Banking 15. Venture Capital 16. Democracy and the Modern Islamic Capitalism Bibliography Index

The Relocation of al-Fustat Pottery Village: Evaluating the Results of Urban Redevelopment

In an attempt to deal with environmental threats to the inhabitants of the Kum Ghurab district in Cairo, the Egyptian government closed the district's pottery kilns in 2003, jeopardizing the livelihood of potters who trace the origins of their workshops to the establishment of al-Fustat in AD 641, the first Islamic capital of Egypt. In response to this potentially tragic loss of cultural and social capital, a model development project was initiated to introduce modern kilns and commercial units as part of a new potters' village and arts and crafts centre. In 2010, the project was the subject of a field study and post-occupancy surveys of primary and secondary stakeholders in the new model village, the old pottery area awaiting demolition and a newly developed arts and crafts centre bordering the model village. Findings suggest that although, the project exhibits shortcomings related to the amount of commercial disruption, loss of employment and citizen participation, relocation satisfaction problems appear to have been addressed in large part because commercial relocation occurred nearby, and local housing was available for area potters and workers; and a new arts and crafts economy has been established to address threats from globalization and technological change that have taken place within the broader pottery industry over the last several decades, reflecting greater demands for high quality decorative products and a wider range of arts and crafts products.

Islamic Capitalism—An Imminent Reality or a Hopeful Possibility for Islamic Finance?

Abstract This paper explores the future of Islamic finance and the sustainability of its development alongside conventional finance within the same capitalistic framework and posits an alternative capitalist structure as a principled foundation for Islamic finance based on Islamic ideals. The success of this medium will ultimately depend on the extent to which traditionalists, who resist departing from ‘purist’ Islamic principles, will challenge the ijtihād of modernists and their support for innovation. The combined knowledge and cooperation of the fiqh scholars and secular experts can facilitate the development and standardisation of Islamic financial instruments. Points of tension between scholars and secular financial experts should not hinder the process of innovation. Instead, their interaction should be seen as an opportunity for creating a platform for an intellectual discourse, especially in the wake of Western economic crises and the demise of the West’s monopoly over global finance.

Application of Ijtihad in Stock Screening Process

The emergence of Islamic economic system has brought about the need to apply Ijtihad in stock screening. It becomes inevitable because the conventional ways of stock trading is prohibited under Islamic Mua’malat. So, Islamic Capital Market has to be critically studied based on Islamic jurisprudence and Shari’ah provisions. The aim of this paper is to critique the application of Ijtihad in stock screening process under Islamic economic system.

The Politics of Trade and Turkish Foreign Policy

The Politics of Trade and Turkish Foreign Policy

Islamic Capital Markets: An Exploratory Study on Investor Rationality

A growing majority of researchers now concede that sentiments of investors do affect stock prices, thus challenging the traditional view that fluctuations in stock pricing stem from solely changes in fundamentals. While these researchers have focused on conventional capital markets; one fast growing industry that has not been subjected to such research is that of Islamic Finance. This research proposal aims to subject the Islamic Capital Markets to theoretical and empirical research, using both qualitative and quantitative methodologies, in order to validate and provide frameworks for testing investor sentiments as applicable in the Islamic Finance Context. For that effect, the paper proposes to; 1) validate and provide an investor sentiments framework that shall measure the levels of investors’ sentiments prevalent in the Islamic capital markets. 2) Construct an Islamic Investor Sentiments Index using the validated framework. 3) Use the Islamic Investor Sentiments Index in order to investigate the affects from investors’ sentiments on Islamic markets performances. The data from qualitative surveys, to be used in order to validate the framework, is expected to generate further hypotheses based on conceptual ideas. Vector auto regressions (VARs) models are to be employed to study the effects from investor sentiments on the stock pricing in Islamic Capital Markets.

Abdulkader Thomas (ed.), Sukuk

This book, which contains a foreword by Tan Sri Sheikh Ghazali Haji Abdul Rahman, the Chairman of the Shari’ah Advisory Council of the Securities Commission of Malaysia, has been introduced by the Securities Commission of Malaysia under the Islamic Capital Market series. It is the first of six volumes. It consists of 16 chapters and several case studies, figures, tables and a list of abbreviations. The objective of the book - published before the effects of the recent global financial and economic crisis were felt in the Islamic capital markets - is to introduce sukuk to the general reader.

Fiqh Issues in Short Selling as Implemented in the Islamic Capital Market in Malaysia

Islamic capital market represents an assertion of Shari`ah principles in the capital market transactions where the market should be free from any elements or activities that are prohibited in Islam. The strict adherence to Shari`ah principles also implies that all financial instruments used by transacting parties in the capital market need to be Islamic. One of the most popular and commonly used financial instruments in conventional capital market is short selling. Many finance literature assert that short-selling provides liquidity, drives down overpriced stocks and generally increases efficiency of the markets. In general, the conventional short sale is selling a stock which investor does not actually own; a transaction which would clearly violate the general Islamic rule of ‘do not sell what you do not own’. Nevertheless, the Shari`ah Advisory Council (SAC) of Malaysian Securities Commission has recently legalized the short selling instrument to be used in Islamic Capital Market in Malaysia. This paper, therefore aims to study fiqh issues surrounding the short selling instrument. Three main issues are specifically highlighted and discussed, namely the issue of bay`ma`dum (selling what the seller does not own), the eligibility of stock as object of a loan contract and benefiting from loan contract. يمثل وجود أسواق المال الإسلامية التأكيد على المبادئ الإسلامية التي تستلزم خلو معاملات تلك الأسواق من كل المعاملات والأنشطة المحرمة في الإسلام. كما أن الالتزام الصارم بمبادئ الشريعة يتطلب أن تكون الأدوات المالية المستخدمة من قبل الأطراف المتعاملة في أسواق المال إسلامية. أحد الأدوات المالية الشائعة الاستخدام في أسواق المالية التقليدية هي البيع القصير (Short Selling)، لأن أدبيات التمويل التقليدي تؤكد على أهمية هذه الأداة لأنها وسيلة لتوفير السيولة، كما أنها تساهم في تخفيض قيمة الأدوات المرتفعة الثمن (Overpriced Stocks)، وفي كفاءة أسواق المال. إن عملية البيع القصير التقليدية تنطوي في العموم على بيع الأسهم التي لا يملكها المستثمر. وهذا تطبيق يخالف المبدأ الإسلامي الذي يحرم بيع الإنسان ما لا يملك. وعلى الرغم من هذا فإن مجلس الشريعة الاستشاري (SAC) التابع لهيئة الأوراق المالية الماليزية قد أباح استخدام هذه الأداة في سوق المال الإسلامي الماليزي مؤخرا. تهدف هذه الورقة إلى دراسة القضايا الفقهية المتعلقة بهذه الأداة، بمناقشة ثلاث قضايا رئيسة وهي: بيع المعدوم، وإقراض الأسهم، ومدى الانتفاع من عقد القرض.

Anatolian Tigers or Islamic Capital: Prospects and Challenges

Turkey has been witnessing a new and interesting phenomenon in recent decades: the emergence of what some call green capital or Islamic capital. Others call the same phenomenon Anatolian tigers. The economic formation originated in those business circles that disapprove of interest and interestbased financial institutions. This is an important issue not only for academic researchers analysing Turkish society and policymakers researching solutions to the problems of the Turkish economy, but also for those who worry about the economic future awaiting them in this country. Within this framework, this article investigates the roots and emergence of Islamic capital and discusses its challenges and prospects. First, it evaluates in a general context the characteristics of physical and human capital inherited from the Ottomans. It goes on to review factors facilitating the formation and rise of Anatolian capital. Lastly, characteristics of the piousconservative rich are discussed along with their related problems and future prospects. As is well known, the main source of production in the Ottoman social formation was agricultural land. In addition, military-related jobs were for many years the most favoured social professions. As a result, the two major economic and social activities for the Muslim subjects of the Ottoman Empire were farming and serving as an army soldier. Other professions were usually left to non-Muslims. For instance, engineering services were generally undertaken by Ottoman subjects of Hungarian origin, financial services by Jews, commercial activities by the French, British and Italian 'Levantines' and the Greeks, and finally, artisanship and jewellery by the Ottomans of Armenian origin.' In other words, trade and artisanship, which together formed the basis for industrial transformation, were controlled by the non-Muslims.2 Since the classical Ottoman land management system called timar did not allow capital accumulation, agricultural surplus did not give way to the emergence of a powerful aristocratic class.3

Islamic Law and Finance; Religion, Risk, and Return

1. Introduction. Part I: The Islamic Law of Finance. 2. Islamic Finance as the Application of Islamic Law. 3. Qur'an and Sunna on Contract and Commerce. 4. Islamic Laws of Usury, Risk, and Property. 5. Islamic Law of Contract. 6. The Law of Islamic Financial Institutions and Instruments. Part II: A Financial Analysis of Islamic Banking and Finance. 7. Islamic Financial Instruments: A Primer. 8. The Opportunity Rate of Capital and Islamic Capital Structure. 9. Derivatives in Islamic Finance. Part III: Case Studies: Islamic Financial Innovation. 10. Innovation in Islamic Financial Products. 11. Conclusion. Glossary. Bibliography. Index.

EQUITY VERSUS GROWTH: THE MALAYSIAN EXPERIENCE OF THE ISLAMIC FINANCIAL SYSTEM UNDER THE DUAL SYSTEMS

In the opening speech at the International Islamic Capital Market Conference held in Kuala Lumpur recently, the Deputy Prime Minister Dato Seri Anwar Ibrahim (1996: 5), referring to the role of the capital market, advocates an “economic growth with distributive justice, profitability with social responsibility, prudent management and transparency in dealings”. He believes that these are the prerequisites of a healthy and sustainable economy.