Towards risk-sharing regulatory framework: a case for Malaysia
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This dissertation studied the efficacy of contemporary Islamic banking regulatory framework in promoting risk-sharing finance. Malaysia is selected as a case study given its strengths as an advanced and comprehensive Islamic financial market. The study found that, risk-transfer philosophy is dominant in the design of the regulatory framework for both the Islamic and conventional financial systems. Harmonizing the regulations of the two markets is necessary to minimize regulatory arbitrage and ensure that both are governed at the same level of regulatory robustness. An unintended consequence however is the deep entrenched risk-transfer paradigm that permeates into the way Islamic banks operate. Risk transfer runs counter to the spirit of Islam that espouses for the proper exchange of property rights in Mu'amalat transactions. For example the use of credit enhancements (such as Wa'ad and ar-Rahnu) is rampant as devices to transfer the risk that the bank must undertake, back to the customers.
Risk-sharing , Finance , Malaysia
Lajis, Siti Muawanah. (2017). Towards risk-sharing regulatory framework: a case for Malaysia. IF Hub, 6 (September 2017), pp. 18-19.
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