Legal Policy and the Exemplary Growth of Islamic Banking Business: The Case of Malaysia

Abstract

As a new economic entity, the Islamic banking business is an interesting object, not solely for economic and legal discourses, but again for the economic and financial anchor that may elevate the profit for the existing financial and economic industries, and thus also for a country. It is generally agreed, therefore, that the growth and development of this new industry in particular counties are due to concerted efforts politically, legally, economically, socially, and other relevant causes. Malaysia is an interesting case to consider since the growth of the Islamic banking business here is proven to be the best compared to the other countries within the region. This article seeks to explore how the Islamic banking business has developed across the decades and how legal policy has spearheaded the growth of the Islamic banking business in Malaysia. The discussion will cover government policies, facilitative legal frameworks, and the simple fatwa issuer body. The adopted legal policy has been proven to be a significant factor that led to the growth of the Islamic banking industry.