Proceedings of 20th International Business Research Conference
4 - 5 April 2013, Dubai, UAE, ISBN: 978-1-922069-22-1
Developing A Social Capital Market for Strengthening
Islamic Values in Capital Market: Case of Indonesia
MB Hendrie Anto
The term of social capital market refers to capital market to
facilitate financing for either pure social projects or blended
social project. This term is getting popular in the USA and
Canada as a result of the growing concern on social
responsible investment (SRI) and the rapid growth of social
enterprise (Strandberg, 2007; Emerson, 2000). The idea of
social capital market could be injected to strengthen Islamic
values of current Islamic capital market, especially in Muslim
countries.
One on the critic to the current development of Islamic capital
market relates to its vision and instruments design which is
slightly different to conventional one. It will distort the vision of
Islam on justice and equity. This distortion stems from the
restricted view of understanding Islam, by only focusing on the
legal forms of a contract rather than the substance when
structuring capital market instruments. The overemphasis on
form over substance lead to potential abuse of Islamic
principles in justifying certain contracts which in fact
contradictory to the Islamic text and ultimately undermining the
higher objectives of Islam. For instance, Islamic bond, finally
end up with the same characters as what it is in the
conventional bond, a debt contract based security with fixed
return. The current Islamic capital markets are also failed to
provide financing needs for small and micro enterprises which is
important for alleviating poverty.
This paper is aim to propose the development of an Islamic
Social Capital Market (ISCM) which is appropriate for financing
social project, either pure social and blended social projects.
Adopting this idea from the conventional social capital market,
the development of ISCM will achieve triple objectives, namely
(1) optimizing social fund, (2) integrating social/public finance to
the whole Islamic finance, and (3) strengthen to realization of
maqashid al shariah of capital market.
Keywords: Social capital market, social return, blended social return, maqashid
shariah
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MB Hendrie Anto, SE, M Sc
Director Center for Islamic Economic Development and Studies (CIEDS)
Economic Faculty, Islamic University of Indonesia.
Bach. in Economics and Development (Gadjah Mada Univ. Indonesia)
M Sc in Islamic Economics, Banking and Finance (Loughborough Univ. UK)
Email : hendrie@fe.uii.ac.id, mohanto96@gmail.com
Phone : +62 274 881546, Fax: +62 274 882589, Mobile: +62 8170403098