Islamic banking, Islamic capital market, and takaful: the Shari'ah and common law harmonisation analysis

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Islamic finance is one of the prominent sectors driving the Malaysian economy. As at 2020, the market share of Islamic finance in Malaysia stood at 18.4 percent out of the total global Islamic financial assets worth USD 2.7 trillion. Among the key drivers facilitating industrial growth is its enabling legal and regulatory framework, which creates a conducive and comprehensive ecosystem. This chapter examines how the conventional legal and regulatory framework is harmonised with the Shari'ah requirements in three Islamic finance focal areas - Islamic banking, Islamic insurance (takaful), and Islamic capital market (ICM). Malaysia's harmonisation journey is not free from any legal tussles, though, in hindsight, the issues and challenges faced in the adaptation process have pushed the Islamic finance industry to be more innovative and proactive in finding solutions to remain relevant and competitive. This chapter begins with an introduction, and then it proceeds with the legal discussion on the issue of jurisdiction for Islamic banking, ICM, and Islamic insurance. The crux of this chapter is the discussion on five important subjects that depict the intriguing harmonisation development as well as the relevant issues and challenges faced in positioning the Shari'ah requirement within the conventional setting. These subjects relate to the Shariah Advisory Council (SAC), the Islamic Financial Services Act 2013 (IFSA), the decline of equity-based financing, conditional hibah in takaful products, and compensation for breach of wa'din Islamic profit rate swap.
Islamic banking , Islamic insurance , Takaful , Islamic capital market , Harmonisation , Shari'ah
Kasri, N. S. (2022). Islamic banking, Islamic capital market, and takaful: the Shari'ah and common law harmonisation analysis. In A. Trakic (Ed.), Shari'ah and common law: the challenge of harmonisation (pp. 33-62). De Gruyter.
De Gruyter

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