Islamic Capital Market Instruments and Performance in Malaysia

Abstract

Islamic Capital Market (ICM) has become a critical aspect of the Malaysian financial system which has played a significant role in the economic growth, financial stability and ethical investment at the expense of financial markets. Islamic capital market instruments, which include Sukuk, Shariah compliant equities, Islamic funds and exchange traded funds, are based on Shariah principles, with their corner stones focused on risk sharing, asset backed financing, and the absence of interest (riba), uncertainty (gharar), and speculation (maysir). Malaysia is currently recognized to be a global leader in the Islamic capital market due to its detailed regulation of the capital market, strong institutional backing and unceasing innovation of Islamic financial products. The paper will discuss the key Islamic capital market instruments in Malaysia and analyse their performance according to the growth of the market, its stability and investor confidence. The analysis brings out regulatory institutions like the Securities Commission Malaysia and the Shariah Advisory Council in enhancing transparency and credibility. Moreover, the paper discusses the stability of Islamic capital market instruments in financial turbulent times and their role in attaining sustainable and inclusive economic growth. These results indicate that the Islamic capital market in Malaysia has been performing excellently due to good governance, diversification of products, and the rising global needs in having ethical and Sharia compliant investments