The evolution of the Malaysian Islamic capital market: Towards a global hub

Abstract

The Malaysian capital market is unique because the Islamic Capital Market (ICM) runs parallel with the conventional capital market. The two main reasons that have been identified to support the emergence of Malaysian ICM are the 1997 Asian Financial Crisis and the liquidity problem resulting from surplus funds from the Islamic finance industry. Following the Asian Financial Crisis, the Malaysian government focused on the development of the Islamic Capital Market especially on the products innovation, infrastructure facilities, policy incentives, human capital development and financial market regulations. This paper summarised the development of the Malaysian Islamic Capital Market including the development stages, regulatory bodies, products and policy initiatives. In addition, this paper also highlights the achievements accomplished by Malaysia in the Islamic Capital Market especially on the pioneered or world first project and products innovation.