Macroeconomic Policy and Islamic Finance in Malaysia (Financial Institutions, Reforms, and Policies in Muslim Countries)

This book offers an alternative framework for macroeconomic policy in Malaysia, derived from the universal principles of social justice espoused in the objectives of the Shariah. It attempts to holistically analyze issues related to public finance, which has been criticized for lack of transparency and justice in wealth distribution. This book explores these criticisms and discusses the principles of Islamic finance that may be applied to macroeconomic policymaking to create a better economy overall. It presents a case for a flat tax system, to make the economy more resilient to shocks, and financing methods that limit interest-rate-based debt contracts and allow greater risk sharing among the market participants on a broad scale. Using both qualitative and quantitative methods, this book models the Malaysian economy based on policies that apply the fundamental Islamic finance principle of risk sharing to demonstrate its benefits in spurring growth, promoting distributive justice, rendering the economy more stable, strengthening the potency of monetary policy, enhancing fiscal governance, and improving financial inclusion. The book will be of interest to students, policymakers, financial institutions, researchers, ministries of finance, central banks, securities commissions, and anyone interested in alternative economic paradigms.-- Provided by publisher Front Matter ....Pages i-xxiii Introduction (Azura Othman, Norhanim Mat Sari, Syed Othman Alhabshi, Abbas Mirakhor)....Pages 1-19 Risk Transfer, Risk Sharing, and Islamic Finance (Azura Othman, Norhanim Mat Sari, Syed Othman Alhabshi, Abbas Mirakhor)....Pages 21-35 Macroeconomic Policies and Risk Transfer (Azura Othman, Norhanim Mat Sari, Syed Othman Alhabshi, Abbas Mirakhor)....Pages 37-51 Islamic Finance, Risk Sharing, and Macroeconomic Policies (Azura Othman, Norhanim Mat Sari, Syed Othman Alhabshi, Abbas Mirakhor)....Pages 53-76 History of Islamic Finance in Malaysia (Azura Othman, Norhanim Mat Sari, Syed Othman Alhabshi, Abbas Mirakhor)....Pages 77-101 Fiscal Policy and Islamic Finance: Malaysia (Azura Othman, Norhanim Mat Sari, Syed Othman Alhabshi, Abbas Mirakhor)....Pages 103-173 Monetary Policy and Islamic Finance: Malaysia (Azura Othman, Norhanim Mat Sari, Syed Othman Alhabshi, Abbas Mirakhor)....Pages 175-237 Policy Recommendations (Azura Othman, Norhanim Mat Sari, Syed Othman Alhabshi, Abbas Mirakhor)....Pages 239-261 Concluding Remarks (Azura Othman, Norhanim Mat Sari, Syed Othman Alhabshi, Abbas Mirakhor)....Pages 263-272 Back Matter ....Pages 273-293 This book offers an alternative framework for macroeconomic policy in Malaysia, derived from the rationale, principles and history of Islamic finance. It analyses specific development of Islamic finance in Malaysia from the point of view of macroeconomic, monetary, and fiscal policy. The book also explores the principles of Islamic finance that may be applied to macroeconomic policymaking to create a better economy overall. It presents a case for a flat tax system, to make the economy more resilient to shocks, and financing methods that limit interest-rate-based debt contracts and allow greater risk sharing among the market participants on a broad scale. Using both qualitative and quantitative methods, this book models the Malaysian economy based on policies that apply the fundamental Islamic finance principle of risk sharing to demonstrate its benefits in spurring growth, promoting distributive justice, rendering the economy more stable, strengthening the potency of monetary policy, enhancing fiscal governance, and improving financial inclusion Azura Othman, Norhanim Mat Sari, Syed Othman Alhabshi, Abbas Mirakhor. Includes Bibliographical References And Index.