SUMMARY AND CONCLUSION

 

    From the writing, even though conventional and Islamic financial instruments are fundamentally different, they perform similarly in a competitive market. In other words, investing in Shariah-compliant securities has no statistically significant downside or upside effects on investors’ wealth compared to investing in conventional instruments. From the perspective of conventional investors, our results imply that including Sukuk and Islamic equities in their portfolios may not provide significant diversification benefits, given the similar price behaviour of conventional and Islamic instruments. Moreover, Islamic banks tended to hold more capital and be more profitable.   

    For ICM, the prohibition of riba (usury or interest), gambling, hoarding, dealing in unlawful goods or services, short sales and speculative transactions are some examples of these divine restrictions. All these prohibitions combined together have a cumulative effect of maintaining balance, distributive justice and equality of opportunities. Interest is prohibited, transactions that involve speculations or generate ambiguity in the subject matter are prohibited, and all economic activities and transactions entail risk sharing in the actual asset or service up to the asset or service's declining value. 

    Sukuk is a significant financial instrument in the Islamic capital market, accounting for about 90% of the whole Islamic capital market. Mudaraba Sukuk, Musharaka Sukuk, Ijara Sukuk, Murabha Sukuk, Salam Sukuk, Istisna Sukuk, and Hybrid Sukuk are the most well-known and widely issued Sukuk structures. According to theories, a special purpose vehicle (SPV) is constituted as trustee on behalf of Sukuk holders in order to issue Sukuk. It oversees and supervises the whole Sukuk transaction in accordance with the kind and nature of the issued Sukuk.

 

    The market, which is booming thanks to Sukuk, has a lot of potential that has yet to be realised. Sukuk, as a key market driver, may be structured in a variety of shari'ah-compliant ways, making it a superior alternative to the ordinary bond, which goes against Islamic teachings. There are a variety of ethical criteria entrenched in the Islamic legal system that must be respected while building the different products of the ICM. Shari'ah problems, for example, must be properly respected while constructing sukuk. The difference between Islamic and traditional financial practises is narrowing. 

    BNM should concentrate on improving prudential standards and the regulatory environment for Islamic financial services. This implies that both conventional and Islamic businesses should be held to the same high regulatory and oversight requirements. Malaysia's ambitions to become a worldwide leader in Islamic finance should focus on developing an internationally uniform, robust regulatory and supervisory structure, with a sound regulatory and supervisory framework for Islamic banks that is compatible with Basel requirements for conventional banks. In this approach, BNM might collaborate with the Islamic Financial Services Board, the worldwide Islamic financial industry's regulatory and supervisory standard-setting institution. 

    As a result, officials in Malaysia are empowering and reinforcing the position of the Islamic financial system through purposeful policies that may supply a variety of Shariah-structured goods and services. It also supports the assumption that Islamic finance, as opposed to conventional finance, is more prone to real-sector growth due to its concentration on equity-based rather than debt-based financing. Conventional financial institutions provide a significant challenge to Islamic financial institutions, thus ongoing efforts are required to maintain a balance between spirituality and providing shareholders with economically viable Islamic alternatives for current investment methods.