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Sukuk risks – a structured review of theoretical research

Sukuk risks – a structured review of theoretical research PurposeThe key purpose of this study is to make awareness for faithful Muslims who are interested to invest in Islamic capital markets so as to enable them making right decision while considering investment in Sukuk over conventional interest-bearing bonds.Design/methodology/approachThis study reviews past literature to analyse contemporary Sukuk risks and discusses several mechanisms to mitigate those risks.FindingsThe study shows that Sukuk can be good alternatives to conventional bonds. Sukuk structures need to be further developed to fulfil the Sharīʿah compliance requirements.Research limitations/implicationsThis study is exploratory in nature, and as such, it seeks to identify the risks related to Sukuk issuance. Given this limitation, it did not provide empirical evidences relating to any specific category of Sukuk risks.Practical implicationsAn in-depth knowledge of Sukuk risks would help both academicians and investors understand the potential problems related to Sukuk structures and take precautions in the early stage to prevent causes of being defaulted or bankrupt.Originality/valueThe risks related to Sukuk have been explored in all potential roots. This study has offered some significant techniques to prevent the relevant risks for investors’ benefits. Information being provided throughout this study is expected to serve potential investors in Sukuk as a guide to make right decisions and enable them to minimise the risk to secure healthy returns on their investments. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Islamic Accounting and Business Research Emerald Publishing

Sukuk risks – a structured review of theoretical research

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1759-0817
DOI
10.1108/JIABR-06-2015-0026
Publisher site
See Article on Publisher Site

Abstract

PurposeThe key purpose of this study is to make awareness for faithful Muslims who are interested to invest in Islamic capital markets so as to enable them making right decision while considering investment in Sukuk over conventional interest-bearing bonds.Design/methodology/approachThis study reviews past literature to analyse contemporary Sukuk risks and discusses several mechanisms to mitigate those risks.FindingsThe study shows that Sukuk can be good alternatives to conventional bonds. Sukuk structures need to be further developed to fulfil the Sharīʿah compliance requirements.Research limitations/implicationsThis study is exploratory in nature, and as such, it seeks to identify the risks related to Sukuk issuance. Given this limitation, it did not provide empirical evidences relating to any specific category of Sukuk risks.Practical implicationsAn in-depth knowledge of Sukuk risks would help both academicians and investors understand the potential problems related to Sukuk structures and take precautions in the early stage to prevent causes of being defaulted or bankrupt.Originality/valueThe risks related to Sukuk have been explored in all potential roots. This study has offered some significant techniques to prevent the relevant risks for investors’ benefits. Information being provided throughout this study is expected to serve potential investors in Sukuk as a guide to make right decisions and enable them to minimise the risk to secure healthy returns on their investments.

Journal

Journal of Islamic Accounting and Business Research – Emerald Publishing

Published: Jan 7, 2019

References

  • Issues in Islamic debt securitization
  • Sukuk risk: analysis and management
  • Liquidity risk management and financial performance in Malaysia: empirical evidence from Islamic banks
  • Contracts in Islamic commercial and their application in modern Islamic financial system