No abstract

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Malaysia's Khazanah Nasional, established in 1994, is one of the 20 largest sovereign wealth funds in the world. In the first decade of its existence, Khazanah had remained a relatively secretive organisation, sheltered by virtue of being wholly owned by the government and reporting directly to the prime minister who provided the organisation with investment direction. However, at the dawn of its second decade of existence, Khazanah became much more transparent and accountable, and provided the public with more information about its activities, including a limited range of financial indicators. The change in leadership and democratic demands explain this turnaround. A reformed Khazanah was also given a new mandate to invest more aggressively internationally. The bulk of its investments has, however, remained in Malaysia and continues to be affected by the dynamics of local politics.

No abstract

Vivid debates on the ethical foundations of contemporary financial practices followed the global financial crisis of 2007-8, with many questioning whether narrow self-interest and profit maximisation should serve as primary drivers of behaviour in finance. This coincides with a resurgent research interest in finance ethics that has investigated whether ethical standards can or should be applied to financial practices and identified types of ethical principles that can or should be adopted. This paper contributes to this literature by investigating how ethical standards could be enforced in the financial sector by focussing on the example of Islamic finance in Malaysia. To facilitate the analysis, the paper adopts a broad understanding of the principal-agent relationship and uses the lens of accountability as a conceptual bridge between ethical standards and their enforcement. The paper concludes by drawing out broad implications of this analysis for 'conventional finance'.