Islamic Capital Markets and Products

CHAPTER 13Bahrain's Islamic Capital Markets – A Case Study

By Dr Hatim El-Tahir

Increased insights and development of Islamic capital markets (ICMs) and their asset classes are tremendously important for both government and private sectors. In relation to the development of instruments and the regulations in capital markets, the discussion about the changing landscape of the global financial market in recent years is crucial. The fundamental changes have been introduced in governance, risk and capital management. These changes increased the idea of investing in real sectors of economies to stimulate growth. They also encouraged academicians, practitioners and policy-makers to consider alternative business models to address the capital and risk regulatory requirements, such as the ‘equity-based’ and risk-participatory financing models offered by Islamic finance.

The Kingdom of Bahrain (Bahrain) leverages its position as a leading regional financial hub. In this new landscape, mentioned above, Bahrain responds proactively to address the new economic and financial orders. The Central Bank of Bahrain (CBB) leads a set of regulatory and government support initiatives, all of which aim at enhancing financial stability strategies and introducing ways to stimulate sustainable economic growth.

This chapter addresses the rationale for developing an ICM in Bahrain. It begins with identifying the achievements made in building its architectural framework. Next, it analyses the factors that ...