Islamic finance and social infrastructure: A regulator’s perspective

The connection between Islamic finance and social infrastructure is important, but hard to articulate precisely. Islamic investors can be assumed to be at least to some extent value-driven, and Sharia’ forbids certain classes of investment. However, what it allows is very broad, and most financing by Islamic banks, for example, has nothing to do with social infrastructure. In addition to banks, there is the possibility of financing through Islamic capital markets, and it is arguable that Sukuk offer instruments well suited to infrastructure financing, including the possibility of linking returns to the achievement of social goals. Malaysia in particular has tried to develop a specific class of socially responsible investment Sukuk, though this initiative has not been widely foll...