Diversification of Islamic Financial Instruments
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financial and regulatory biases that favour debt and place equity holding in a
disadvantage;
 Creating positive incentives for risk sharing via the Islamic capital/stock market;
 Investing in massive public education campaign to familiarize the population with the
benefits of stock market participation. Effective use of new age media is also essential.
 Investing in human capital to produce competent, well-educated and trained
reputational intermediaries – lawyers, accountants, financial journalists and Shariah
scholars – which means investing in the creation of world class business and law
schools;
 Limiting short sales and leverage (including margin operations) of non-bank financial
institutions and the credit-creation ability of banks through prudential rules that
effectively cap the total credit the banking system can create;
 Developing strong and dynamic regulatory and supervisory system for the stock
exchanges that not only continuously monitor the behavior of markets and
participants but stays a few steps ahead of those with penchant and motivation to use
regulatory arbitrage to get around rules and regulations;
 Finding ways and means of regulating and supervising reputational intermediaries or,
at least, mandating that they become self-regulating to ensure minimization of false
reporting or misreporting under threat of liability to market participants;
 Ensuring completely transparent and accurate reporting of the day’s trade by all
exchanges; and
 Instituting legal requirements for the protection of the rights of minority shareholders.
 Most importantly is to view the development of required Human capital as core to
overcoming growth challenges. The supply of specialized personnel, those who are
aware of the core theoretical underpinnings and the practical philosophies of Islamic
finance, was highlighted as the most crucial of needs. It is recommended that
educational institutions have to play a significant role in providing a sustainable
workforce for Islamic financial institutions through producing graduates and skilled
staff with industry relevant knowledge. Moreover, the industry itself also needs to take
up the responsibility and work in tandem with academia to cater the desired need.