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Essay / Islamic Capital Markets and Sukuk or Islamic Bonds , Turk-Ariss and Weill, 2011). From a business perspective, the term Sukuk refers to securities that comply with Sharia as well as investment principles, which likely prohibits the various Sharia laws set forth, such as riba or payment or acceptance interests (Shaikh & Saeed, 2010). ). According to the Accounting and Auditing Organization for Islamic Financial Institutions or AAOIFI, Sukuk are certificates of equal value representing undivided shares in the ownership of tangible assets, usufructs and services or (in the ownership of) assets of particular projects or special investment activities (Bi, 2008). The Sukuk market, in particular, has witnessed considerable growth and development globally through which it has applied the best financial intermediation approach. The Sukuk market was largely dominated by government debt securities, reflecting the growing need for continuous, long-term financing from the private sector. More so, it was found to be of great importance in its role during an economic downturn (Zin, Hashim, Khalid, Opir, & Sulaiman, 2011). The growing demand for issuance of Sukuk has been a significant trend in the global financial system, considering that Sukuk, in its context, presents advantages and favorable characteristics. As noted by Mohamed (2008), the advantages of sukuk essentially reflect the fact that sukuk are tradable, which provides a fixed or variable percentage return over the long term. More so, sukuk are also considered to be tradable on secondary markets...... middle of paper ......and, whereby the price encompasses the cost of the asset in addition to a profit margin agreed for the seller (Jamaldeen, nd). In such cases, the issuer of the contract is the seller of the Murabahah product or merchandise and the subscribers are the buyers of those particular merchandise. These subscribers are entitled to the agreed selling price upon resale of the goods. It should be noted that a Murabahah Sukuk cannot be bought and sold in the secondary market, and certification signifies a liability of the subsequent purchaser of the product towards the Sukuk holders. Indeed, Sharia law emphasizes that it is not permitted to trade debt securities on a delayed basis (Zin, Hashim, Khalid, Opir, & Sulaiman, 2011). Figure 8 shows the structure and execution schedule of the issuance of Murabahah Sukuk, as implemented by a Malaysian domestic mortgage company, Cagamas..
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