Exigency for Sukuk Bonds Financing: Issues and Discussions

Abstract:     
This paper is an attempt to examine a growing interest in Islamic financial instruments with a special focus on Sukuk- the Islamic bond financing. It traces the history of Islamic Financial system, the emergence and global explosion in Islamic banking and finance and the exigency for Sukuk by different countries as an alternative to conventional bonds in diversifying risk especially countries from the Middle East who are usually over-exposed to dollar assets. Employing secondary data, this paper enunciate current and future challenges to Sukuk issuers most importantly in the West. After the introduction, section one is dedicated to a brief discussion on the history of Islamic Banking and Finance in the world in general and Malaysia in particular. Section two x-tray the global explosion for Islamic financial instrument as well as exigencies for Sukuk Bonds by different countries as an alternative to conventional bonds in diversifying risk, further issues and discussion on the subject across the globe were deeply delve into in section three. The article closes by enunciate current and future challenges facing the issuers and holders of Sukuk bonds most importantly in the West; especially in attaining the Maqasid Al-Shari’ah (the objectives of Shari’ah) followed by conclusion and recommendations in section four.

Number of Pages in PDF File: 24

Keywords: Sovereign Sukuk, Bonds, Shari’ah, Islamic Financial System, ethical financing

JEL Classification: G12, G32

working papers series