The Contribution of Islamic Banking on Investment for Economic Development in Malaysia: Pathways for Nigeria

Abstract

This study aims to investigate the contribution of Islamic banking to investment for economic development in Malaysia and to explore potential pathways for economic development through Islamic banks in Nigeria, drawing on Malaysia as a model. We employed a qualitative approach using a face-to-face interview technique for the data collection. The sample size of twelve (12) participants from Islamic banking experts, investment experts, and economic development experts was engaged. The data was analysed using a thematic and descriptive analysis. The outcome of the study revealed that Malaysia incorporated foreign banks and foreign investors mostly from the Middle East region. Additionally, several Malaysian Islamic banks engaged in offshore investments in neighbouring countries such as Indonesia and Thailand. However, Malaysian Islamic banks are not proficient in engaging in shipping investment; they prefer to go to the safe zone. Furthermore, the results show that Islamic banks in Malaysia are beyond profit and loss sharing investment accounts (PSIAs). The data shows that the system has the potential to support Islamic capital market investment, Islamic micro-investment, business investment accounts, Islamic gold investment accounts, agricultural investment, and an Islamic microfinance model for the benefit of micro-entrepreneurs, small-scale farmers, and SMEs for economic development.  The study has practical and economic implications for the contemporary Islamic finance stakeholders, Islamic bankers, Islamic economists, real estate investors, shipping investors, offshore investors, and Islamic micro-investors