Islamic financial system: the Malaysian experience and the way forward

Abstract

Purpose

The purpose of this paper is to elaborate and elucidate the experience of Malaysia in developing the Islamic financial system by explaining the different developments and methods that has been deployed since its inception in 1963 until now and how best these experience can be used in developing Islamic financial industry.

Design/methodology/approach

The objectives are achieved by analyzing the different materials gathered through library research. The sources of the materials includes books, statistics, reports, presentations and conference papers. The scope of the study is limited to the Malaysian financial industry development.

Findings

The paper found that Malaysia has a very encouraging history of Islamic banking and has big potential to succeed in this area. However, some areas need to be improved, as suggested in the paper. It also found that the Malaysian model in developing Islamic financial industry can be taken as a benchmark in the development of such industry in other countries.

Originality/value

The originality of the paper lies in the in‐depth analysis of the different steps of development that Malaysia has gone through in the development of Islamic financial market, including banking, capital market and Takaful.

Citation

Akram Laldin, M. (2008), "Islamic financial system: the Malaysian experience and the way forward", Humanomics, Vol. 24 No. 3, pp. 217-238. https://doi.org/10.1108/08288660810899377