Open AccessAn Islamic Perspective on Capital Markets and "Islamic" Securities in Malaysia
Author(s) -
Muhammad Anwar
Publication year - 1995
Publication title -
pakistan development review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.154
H-Index - 26
ISSN - 0030-9729
DOI - 10.30541/v34i4iipp.865-878
Subject(s) - islam , capital market , diversification (marketing strategy) , financial market , market liquidity , investment (military) , economics , developing country , welfare , financial system , business , finance , market economy , economic growth , philosophy , theology , marketing , politics , political science , law
Financial systems channel funds in an economy from the surpluseconomic units lacking appropriate investment opportunities to thedeficit economic units with such opportunities. The surplus unitsseeking returns by employing their funds in productive activities andthe deficit units interested in exploiting their investmentopportunities contact one another through a network of financial marketsa~d institutions in the economy. The participants make financialcontracts in ways which satisfy their requirements regarding liquidity,denomination, maturities, and risk diversification [Anwar (1987), pp.296-297]. In this way, the financial markets contribute to a higherproduction, efficiency, and economic welfare of everyone in the society[Mishkin (1989), p. 45]. In recent years, the appetite for investment inthe markets of developing countries has increased manyfold [Hussain(1994), p. 2]. A good many of such developing markets are in Islamiccountries such as Egypt, Turkey, Bangladesh, Pakistan, and Malaysia.Well-developed Islamic financial markets would contribute towardseconomic development by attracting capital inflows and checking capitalflight from the Islamic nations.