Islamic capital markets: integration in North Asian markets

Abstract

Purpose: This study aims to understand the trends of Islamic Capital markets within North Asia, the challenges in place, and the causes for them. The study then goes on to shed light on some of the solutions to encourage greater developments within the market

Methodology/approach: The study observes current standing of successful markets of integrating Islamic capital markets, as a model for understanding the challenges. With that solutions from a Macro and Micro perspective are suggested for market participants.

Findings: The study observed a number of issues that were hindering the development of Islamic Capital Markets in North Asia and addressed those concerns from a macro and micro perspective. Some of the core issues that are hindering the development of Islamic finance, are the slow progresses in regulatory developments in specific markets in North Asia, and the difficulty in broad accessibility of Islamic financial products. The slow and lackluster regulatory support the sector has received is a more fundamental issue that needs to be tackled, whereas the accessibility of the products is specific to the market itself.

Regulatory developments that are absent within the markets, include guidelines and legislation that legitimize Islamic finance within jurisdictions, as well as government participation within the sector through bodies and active engagement in Islamic financing. The study goes to recommend changes that include establishment of bodies and legislation that legitimizes the sector. The core micro issue comes to lack of Islamic product development within the region, making it difficult to take part within the sector. The findings highlight product strategies through funds, as well as shed light on shariah complaint risk management strategies.

Practicality: Understanding the practical concerns surrounding the lackluster growth in the region is essential in developing solutions to reverse it. It is also vital to have an understanding of the benefits growth in the sector could place within the economies of the region.