Institutionalisation of Islamic finance industry in Malaysia: social theories’ lenses

Ab Aziz, Norazlin (2021) Institutionalisation of Islamic finance industry in Malaysia: social theories’ lenses. PhD thesis, University of Glasgow.

Abstract

This thesis aims to critically evaluate and explore the mechanism and reasons of the institutionalisation process of the Islamic finance industry in Malaysia mainly from a policymakers’ perspective. Another aim of this thesis is to give richer insights and orderly assessment of analysis by interpreting the institutionalisation process from social theories perspectives.

Thus, this thesis analysed speeches delivered by Malaysian policymakers and was supported by interview sessions to further probe the developmental efforts for the industry. Policymakers here comprise a group of regulators, a government-linked investment company and an international standard-setter headquartered in Malaysia. By using the data set of 1996 until 2017, content analysis of the speeches was conducted to extract their principles, process, and management. A similar set of speeches are also used for linguistic analysis to examine the behaviours and interaction patterns of policymakers towards their audience reflected therein. Apart from these retrospective analyses, interviews were conducted to gain insights and better perspectives on the reasons and mechanism employed by the government as well as the challenges faced by Malaysian policymakers and finally, the future roadmap envisaged for the industry.

The analysis of results is segregated into three phases of development; Phase 1 (before 2000), Phase 2 (2001-2010) and Phase 3 (2011-2017). Principal-wise, the findings show that Malaysian policymakers emphasised international factors and global fatwa discrepancies during Phase 1 before focusing on national and local importance agenda in Phase 2 and Phase 3. In terms of handling the institutionalisation process, Malaysian policymakers show consistent responsiveness towards the industry’s needs throughout all three phases. However, management of the process through performance indicators were higher in Phase 2 and 3. From linguistic analysis, it is generally shown that Malaysian policymakers behaved uniformly with equal sentiments of optimism, certainty, commonality, and activity but significantly differed in delivery styles to the audience. The interactions to the audience are highly analytical and moderately authentic, but low in using cognitive processes and visualisation means. From the interviews, the policymakers further elucidated the reasons behind this institutionalisation process that are the socio-identity of Malaysia, political will of leaders, availability of talents for Islamic finance, maqasid shariah and benefits derived from the industry. These include economic and social benefits, elements of sustainable development and the enhancement of regulators’ efficiency. In addition, they unravelled the mechanism of the top-down approach comprising implementation of legislative acts and national strategic plans, collaboration of regulators, tax incentives provision, involvement of institutional investors, and monitoring of growth and investments from non-Muslims. However, the challenges for the industry also exist in the forms of weak corporate governance, biased economic decisions towards conventional subsidiaries and the internationalisation of the industry. With regard to the future of the industry, the interviewees foresee for it to integrate sustainable development elements. Another opinion is that the Islamic finance industry should be linked with social finance for the betterment of society welfare.

• Item Type: Thesis (PhD)
• Qualification Level: Doctoral
• Keywords: Institutionalisation, Islamic capital market, Islamic finance, development of Islamic finance.
• Subjects: H Social Sciences > HG Finance
• Colleges/Schools: College of Social Sciences > Adam Smith Business School > Accounting and Finance
• Supervisor's Name: Naeem, Dr. Shammyla and Abdelsalam, Prof. Omneya
• Date of Award: 2021
• Embargo Date: 31 March 2024
• Depositing User: NORAZLIN AZLIN AB AZIZ
• Unique ID: glathesis:2021-81955
• Copyright: Copyright of this thesis is held by the author.
• Date Deposited: 28 Jan 2021 14:49
• Last Modified: 28 Jan 2021 14:49
• Thesis DOI: 10.5525/gla.thesis.81955
• URI: https://theses.gla.ac.uk/id/eprint/81955