The nature of Islamic socio‐scientific inquiry Theory and application to capital markets

A theoretical methodology premised on the epistemology of divine unity as the world view of all Islamic socio‐scientific inquiry, is introduced. This general theory based on the knowledge‐centred interactive, integrative and evolutionary process of social becoming is next formulated for the specific case of capital markets. The methodology premised on unity and unification of knowledge is shown to be a universal application interconnecting science and society through a process‐oriented knowledge‐centred model. Finally, the generalized theoretical methodology and its specification to the case of Islamic capital market is used to critically evaluate Malaysia’s Islamization program, specially during the heady days of her stock market and currency turmoils. Alternative policy recommendations are provided for a newer outlook on Malaysian development and capital market Islamization programs. A general inference is thus derived and conveyed to the field of capital market stability arising from a direct linkage between real sectoral activities and endogenous money as store of value of real transactions. The approach of this paper being epistemological in nature, it undertakes a fundamental look at Qur’an and Sunnah for developing shari’ah‐rules (Islamic law), i.e. ahkam as‐shari’ah (rules derived from shari’ah), in the area of socio‐scientific inquiry in general and Islamic capital market in particular.