Islamic capital markets and products

Hossein Askari

Chapter 17 in Research Handbook on Global Capital Markets Law, 2023, pp 269-284 from Edward Elgar Publishing

Abstract: Islamic capital markets and products, and more generally Islamic finance, are newcomers to international financial markets. Islamic finance emerged in the early 1970s as higher oil revenues afforded many Muslims and Muslim countries the funds to invest domestically and internationally. This, coupled with blossoming academic writings on Islamic economics and finance, resulted in Muslims becoming increasingly aware of the economic and financial teachings of Islam, with Malaysia the engine for the development of Islamic finance and Islamic capital markets. The two key components of the capital markets are the equity (stock market) and debt markets (bond market and money market). Of secondary importance are the financial derivatives and foreign exchange markets. While Islamic capital markets have essentially the same elements as the conventional capital markets, the constraints on Islamic capital markets and more broadly on financial markets set them apart from their conventional counterparts. These constraints are derived from the Qur’an and the practice (sunnah) of the Prophet Mohammad and are enumerated via the Shariah (which translates as ‘the way’), a collection of rules derived from the Qur’an and the sunnah to support Muslims in their practice of the spiritual, social and economic recommendations of Islam. Specifically, Islamic finance is built on the basis of risk sharing and as such interest-bearing debt instruments or conventional bonds are prohibited, resulting in alternative debt instruments or sukuk that are very different from conventional bonds. Islamic capital markets and products are still in the early stages of their development. Growth in these markets has been rapid and with innovation, standardization and better universal regulation and monitoring, rapid growth can be expected to continue.

Keywords: Economics and Finance; Law - Academic (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.elgaronline.com/view/edcoll/9781800379305/9781800379305.00026.xml (application/pdf)
Our link check indicates that this URL is bad, the error code is: 503 Service Temporarily Unavailable

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:elg:eechap:20368_17

Ordering information: This item can be ordered from
http://www.e-elgar.com

Access Statistics for this chapter

More chapters in Chapters from Edward Elgar Publishing
Bibliographic data for series maintained by Darrel McCalla ().