KUALA LUMPUR: Islamic finance should provide a framework to assess the impact on the economy, well-being of the society and environment, says former Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz.

She said on Thursday that greater interest in responsible financing emerged after the 2008 financial crisis, which was advantageous to Islamic banking as it shared similar principles to ethical financing. 

The next step, she said, proposed future financing should also be value adding and be value-based. 

“It needs to go beyond shareholder value, it needs to focus on impacting the economy, well-being of the society and environment,” she said at her lecture after being conferred the Royal Award for Islamic Finance 2018 (Royal Award). 

The award was given by Sultan Nazrin Muizzuddin Shah, the Sultan of Perak and the Royal Patron for Malaysia's Islamic Finance initiative. The award presentation ceremony was held in conjunction with the Global Islamic Finance Forum 2018 (GIFF 2018). 

Zeti said there needs to be a set of performance parameters or matrices to measure these results. 

“It also encompasses addressing the wider societal problems such as reducing the carbon footprint, strengthening the surrounding communities with economic empowerment and inclusion as well as improving lives by bringing basic amenities to the community,” she said. 

Zeti also said financial intermediation should also be simpler and easy to understand to reduce prospect for complex and opaque financial engineering. 

She called for more collaborative efforts by training and research institutions from different jurisdictions. 

These collaborations could work on designing and offering capacity building modules.