Abstract: The climate change challenge and the growth of the Islamic finance industry, together with the increase in socially responsible investing, could position green sukuk as a key instrument for financing clean energy and resilient infrastructure projects as well as shorter-term energy efficiency projects. Expansion of a green sukuk market could promote environment-friendly projects and improve livelihoods, helping Islamic finance achieve its moral objectives. A roadmap shows how policy makers could create a green sukuk market in Sub-Saharan Africa.

Abstract: In Italy, the dramatic reduction of government incentives has caused a decrease of investments in the renewable energy sector. For this reason, it is necessary to rethink funding techniques, extending the analysis to different cultural and financial models. In this paper, we study the incentive-dependency of an Italian case study in the wind energy sector in order to reach grid parity, comparing the obtained results with those of Islamic finance and conventional finance. In particular, we propose that Sukuk Islamic finance instruments be used for the realization of real assets in Shari’ah-compliant finance that prohibits interest rates, as in conventional financial markets, and we present the building cost thresholds necessary to achieve grid parity. Our results highlight the importance of incentives and the applicability of the use of Sukuk instruments for sustainable investments in the wind energy sector, which is crucial in the framework of current efforts against climate change as well as efforts to reduce greenhouse gas emissions.

Abstract: Commonly, green sukuk is highly demanded by investors as it promotes green activities which give a good image for investors. This would support climate change issues. This paper's objective is to analyze the performance of green sukuk's price after the issuance date. During the offering period, most green sukuk was oversubscribed, which may implicate after the issuance. The method applied for this research was the descriptive method by comparing the prices' movement of green sukuk with another green bond after issuance and similar bond for benchmarking and correlation analysis. The result showed that since the condition during the offering period was oversubscribed, it does not necessarily correlate to the performance after issuance period of green sukuk. The decrease of Indonesian green sukuk prices are caused by macroeconomic factors hence the good image of green activities does not always attract investors directly. Climate change issues may not be the first consideration since investors may only seek for profit motive.

Abstract: Muslim countries of the developing world suffer indebtedness resulting mostly from funding development infrastructure. Faced with a dire need for development infrastructure but with inadequate resources to fund them domestically, these governments often resort to foreign borrowing. As neither foreign banks nor international debt markets would allow for the debt to be in home currency, the funding is invariably denominated in foreign currency. For the borrowing country, in addition to currency exposure such borrowing increases the country's leverage and economic vulnerability. As these countries typically have a narrow economic base with heavy reliance on commodity exports, they are susceptible to the vagaries of commodity price fluctuation. Leverage increases the amplitude of the economy's fluctuation, resulting if not in outright crisis, then, at least in financial distress and depreciating home currency. As a result, when the foreign currency funded project comes on stream, it is burdened with huge accumulated debt which in many cases makes the project unmanageable without further government help through subsidy of operating costs. This further stresses already stretched government budgets and perpetuates indebtedness. This cycle of borrowing, leverage and vulnerability can be broken by innovative use of sukuk. The problem with debt financing is that the servicing requirements are independent of the underlying project's risk or cash flows. This paper presents two sukuk structures based on the risk sharing principles of Islamic finance. Sukuk that have returns linked to the nation's gross domestic product growth if the funded project is non†revenue generating and linked to earnings of the project if it is revenue generating can avoid the problems above. The pay†off profile, estimated cost of funds and returns to investors of these sukuk are discussed. When designed in small denomination, such sukuk can enhance financial inclusion, help build domestic capital markets and enable the financing of development without stressing government budgets.

Abstract: Purpose The purpose of this study is to provide a critical review on how the Khazanah’s Sukuk Ihsan was structured in compliance with the requirements for issuance of Sustainable and Responsible Investment (SRI) sukuk set by the Securities Commission (SC) Malaysia. Design/methodology/approach To explain the structures and features of the Sukuk Ihsan, this study extracted important information from the sukuk’s Principle Terms and Conditions and Information Memorandum and presented them in a simple and easy-to-understand way. Next, this study refers to Part D: Requirement for Issuance, Offering or Invitation to Subscribe or Purchase Sustainable and Responsible Investment Sukuk of the SC’s Guidelines on Sukuk (revised edition: 28 August 2014) to assess the compliance of the sukuk in terms of eligibility of SRI sukuk issuer and SRI projects, use of proceeds, reporting and disclosure and independent assessment on SRI programmes. In addition, this study then compares the requirements stated in the SC’s SRI Sukuk Framework with the International Capital Market Association’s Green Bond Principles (GBP) and the USA’s Social Impact Bond (SIB) Act 2014. Findings The present study finds that the definition of eligible SRI sukuk issuer in the Guidelines on Sukuk seems to be more stringent compared to the one provided in the GBP and the US’ SIB Act. Nevertheless, the SRI Sukuk Framework provides a more comprehensive yet precise list of eligible SRI projects, covering both environmental and social aspects, compared to the GBP (which only focuses on broad categories of environmental projects) and also the USA’s SIB Act (explicitly outlines 13 social projects which are aligned with the US Federal Government’s agenda in tackling social illnesses). Indeed, the main difference between the eligible SRI sukuk projects and its conventional counterparts lies in its compliance to Shariah principles. It is also observed that a significant emphasis has been given on SRI legislations in ensuring proper reporting and disclosure provided to the SRI sukuk stakeholders together with critical evaluation on the impacts of SRI programmes provided by an independent assessor. Practical implications This paper contributes towards enriching the literature on the Islamic capital market, particularly on the integration between sukuk and social impacts investing. This paper was intended to highlight the important requirements in issuing SRI sukuk to various stakeholders of the Islamic capital market. Originality/value The authors hope to shed some lights on the unique features and structural applications of SRI sukuk and its importance in becoming an effective instrument to raise funds for social agenda of a country by providing a real and practical example.

Abstract: With the large expansion of Islamic finance in the recent years, sukuk, which are the Sharia-compliant substitute to conventional bonds, are now becoming more prominent. The aim of this study was to examine the impact of sukuk issuance on firm performance. To do so, we analyse how stock market performance and operating performance (OP) are influenced by issuance of sukuk and bonds on a sample of Malaysian listed companies. We consider the short-term and medium-term stock market reaction through the computation of cumulative abnormal returns and buy-and-hold abnormal returns. We investigate the impact on OP by performing regressions and by calculating abnormal operating performance (AOP) so that we can compare how issuance affects similar firms. We find that sukuk issuance generates a negative stock market reaction both in the short term and in the medium term. We also find evidence that issuing sukuk hampers OP. The analysis of AOP shows that sukuk issuers have better performance than their matched bond issuers, but that sukuk contributes to reduce the gap in performance over time. Overall, our results support the view that sukuk issuance hampers stock market performance, but that it is not attributable to a signalling effect on the bad financial situation of the issuer. We interpret our findings as evidence of adverse selection taking place on the financed projects and agency problems stemming from the specific sukuk structuring with stock market investors more reluctant to invest in sukuk issuers.

Abstract: The majority of Muslim countries face increasing pressure on their budget, which pushes to more public spending. Eventually, the main victim of this situation will be the welfare of Muslim communities. Despite Islam does not tolerate negligence regarding the importance of State as major player in preserving the welfare of Muslim communities, it offers a third option to support public effort through the institution of Waqf. Indeed, this institution has played a crucial role all along Muslim civilization and it is invited to more innovation to answer to today’s challenges. Sukuk-Waqf can be seen as the perfect sustainable financing instrument offered by Islam to help sustain public spending by the people and for the people. It presents. This paper will try to examine the concept of Waqf, cash Waqf and Sukuk Waqf is Islam and their evolution during Muslim civilization. Finally, it will go through modern attempts to implement this model that can answer the need for financing to support public effort to preserve the welfare of Muslim citizens.

Abstract: Macroeconomic factors are regional or national economic factors which externally impact the financial strategies of governments and corporations, including debt financing decisions. The literature related to the financial management acknowledges the significant role that macroeconomic factors play to determine the financial market development. The aim of this paper is to propose a conceptual model/framework for investigating the role of macroeconomic factors on Sukuk market development (SMD) in gulf cooperation council (GCC). GCC economies depend heavily on oil revenues which makes them subject to oil prices fluctuations. Therefore, GCC’s governments should diversify their economies by looking for Sukuk as an alternative source of financing, to cover their budget deficit, when the price of oil decreases, and reduce their reliance on oil, because Sukuk has advantages compared to the conventional bond particularly in terms of less information asymmetry. The prior studies have mostly focused on firms’ characteristics determinants of Sukuk issuances but gave a little consideration to the role of country’ characteristics on SMD. This paper proposes a framework to explain the main macroeconomic determinants of SMD with a focus on the GCC countries that have the largest region in terms of the Islamic financial assets. It is anticipated that the outcome will support policymakers to improve the current state of Sukuk market.

Abstract: This paper investigates the use of the green sukuk, particularly, for financing the renewable energy projects. More precisely, three case studies have been chosen for discussion. In the first case study, we highlight “Hybrid Sukuk” framework adopted by Tadau Energy Sdn. Bhd. for financing solar photovoltaic (PV) plants. The second case study, we reviewed “Sukuk Wakalah” issued by BEWG (M) Sdn. Bhd., as an ideal solution for water treatment project. Finally, for the third case study, we have discussed in detail about “Sukuk Murabahah” which is being used by Sarawak Hidro Sdn. Bhd. for financing the hydroelectric plant (BAKUN hydroelectric project).

Abstract: The issuing of sukuk (or Islamic bonds)as an instrument in Islamic finance has grown in recent years. The sukuk markets have advanced in the way of using tangible assets to receivables as an underlying asset. Premised on this development, sukuk structures have shifted from asset-backed to asset-based to asset-light and blended-assets. Given this evolution, this study will trace the development of innovation in the sukuk structure. Observed here are changes or trends in the sukuk structure, including how market participants‟ demands and Shariah issues influenced such changes in the sukuk. The main issues that emerge are: firstly, sufficient physical assets in response to the demands of issuers; and secondly, solutions offered by Shariah advisors who play a role in shaping the issued sukuk structure.

Abstract: The purpose of this paper is to investigate the default characteristics of Sukuk issues by corporate firms in Malaysia using value-at-risk (VaR) techniques over a period of 16 years from 2000 to 2015 and across nine economic sectors.,The paper employs non-parametric and Monte Carlo simulations to estimate Sukuk defaults.,The authors analyses revealed that the VaR predictions were fairly consistent with the ratings provided by credit rating agencies, despite the limited tradability of Sukuk in the secondary market. The study was able to demonstrate that Sukuk is not riskier than conventional bonds in the Malaysian context.,The research findings suggested that VaR values will depend on the fundamental value of a firm based on the considerations of market, credit and operational risk. It does not rely on the type of debt instrument, whether a Sukuk or conventional bonds.,The use of Sukuk along with conventional bonds as debt instruments creates opportunities for investors and bond issuers globally.,Although Sukuk has generated much interest among financial market players, studies are lacking on how to predict Sukuk defaults and whether Sukuk has the same risk profile compared to conventional bonds.

Abstract: Having strategic position makes Indonesia rich in biodiversity. However, there is a gap in funding this biodiversity; whereas, the existence of this biodiversity can be optimized by the government to enhance the economic development in Indonesia. This study aims to analyze potential financial solutions to fill the gap and increase the biodiversity funding in Indonesia. This research did a literature study from various sources such as BIOFIN countries, UNDP, and IBSAP of Indonesia; and conducted an assessment based on the results, sources, financial impact categories, and likelihood of success categories. The results show that out of 156 financial solutions studied, 32 of them have high financial impacts and are most likely successful to be implemented in Indonesia, and 8 of them are very potential to be implemented; those are state budget, corporate social responsibility (CSR), nature swap debts, taxes and fees in the tourism sector, payment for ecosystem services, ecological fiscal transfers (EFT), zakat, infaq, shadaqah, and waqf (ZISWAF), and green sukuk.

Abstract: The purpose of this study was to determine the short and long term effects of three Islamic capital market instruments, namely corporate sukuk, the Jakarta Islamic Index, and Islamic Mutual Funds for economic growth. The data set is extracted from Badan Pusat Statistik Indonesia and Otoritas Jasa Keuangan Indonesia (OJK). The period of time used is from January 2011 to December 2017. This research uses co-integration test to see long-term relationship and error correction model to see the existence of short-term relationship. The results show that in the long-term there is a significant positive influence between corporate sukuk, the Jakarta Islamic Index and Islamic Mutual Funds on Economic Growth in Indonesia. Whereas in the short-term there is no influence between corporate sukuk, Jakarta Islamic Index, and Islamic Mutual Funds on Economic Growth in Indonesia. Based on the results of the study, it can be implied that the Islamic capital market is able to become an alternative capital to increase economic growth in Indonesia with long-term analysis using ECM.

Abstract: This study aims to find out how the influence of sharia sukuksukuk on economic growth and analyze the implementation of sukuk growth from 2002 to 2015. It turns out that from year to year, investors are increasing in sukukijarah according to secondary data obtained from statistics. This study uses a quantitative approach is a descriptive method and verification of case study approach. this article is a quantitative article. This paper is library research, Analysis of the paper data used is content analysis. The results of the hypothesis from the authors that sukukhijarah affect economic growth.

Abstract: This study was to determine the effect of Sukuk maturity, Sukuk rating, and Sukuk emmisions value on Sukuk yield. The sample in this study was 157 corporate Sukuk issued by corporate and listed on Indonesia Stock Exchange (IDX) during the period of 2013-2016. This study used multiple regression analysis to examine the effect of Sukuk maturity, Sukuk rating and Sukuk emmisions value on Sukuk yield. The results of this study showed that the maturity of Sukuk has significant positive effect on Sukuk yield, Sukuk rating has significant negative effect on Sukuk yield, and value emissions of Sukuk has not significant effect on Sukuk yield. Keywords: Sukuk maturity, Sukuk rating, value emissions of Sukuk, Sukuk yield

Abstract: Sukuk market has been growing very fast in recent years. However, because of the sukuk market problems, the potential of the market has not been realized yet. One of these problems is the inactive, weak and sluggish secondary market of sukuk. Because of the weak secondary market, investors and issuers of sukuk cannot benefit from the advantages of sukuk completely. In order to benefit from sukuk, sukuk secondary market problems must be overcome and the secondary market of sukuk must be active. In this regard, we researched the reasons of weak sukuk secondary market by using a descriptive method in this paper. We proposed some solutions to resolve the problem. If the solution proposals can be put into practice, we think that sukuk secondary and primary market will develop and parties of sukuk can take advantages of sukuk more significantly.

Abstract: This paper aims to analyze the need of Islamic banks for specific Statement of Financial Accounting Standards (SFAS) No. 110 for sukuk accounting in Indonesia. In fact, some Islamic banks have already prepared International Financial Reporting Standards (IFRS), and accordingly, a suitable standard is needed for this case.,The research methodology involved interview with a senior accounting manager of an Islamic bank focusing on relevant topics in sukuk to sharpen the analysis. Equally important, research reviewed and compared financial statements on sukuk accounting among Islamic banks, before and after adoption of sukuk accounting standard.,IFRS require market valuation based on interest rate. As interest rate is unlawful in Islamic teaching, IFRS may not accordingly be suitable. Therefore, SFAS No. 110 was issued by the Indonesian Institute of Accountants (Ikatan Akuntan Indonesia). Considering the fact that this standard did not explicitly adopt the IFRS paradigm, there have been consequent conflicts in Islamic bank management because of preference of global recognition to IFRS. Adopting IFRS would be more compatible with other countries’ general accounting standards. In addition, significant differences are found in sukuk accounting treatments by Islamic banks before and after the standard adoption.,This research only focuses on such question of why specific accounting standard for sukuk accounting is needed by Islamic banks in Indonesia, while only few Indonesian Islamic banks were initially aware of the issue.,This paper may be the first paper discussing the response to and need for sukuk accounting in Indonesian Islamic banks.

Abstract: Sukuk or Islamic bonds as new “Halal” securities had wildly expanded in Muslim and non-Muslim capital markets. So, this study aims to investigate the causal relationship between Islamic bonds (sukuk), oil and precious metals “silver and gold” prices in Asia pacific. This study used VAR model relying on daily data. The findings of Granger causality test and impulse-responses analysis results provide substantial evidence in favor of the relation between sukuk and the commodity market variables (oil, gold, and silver) meanwhile and unlike many empirical studies, don’t we have found that oil doesn’t cause changes in precious metals prices. Therefore, the idea that Islamic financial markets provide diversification benefits and they are safe havens during oil crisis cannot be supported empirically. DOI: 10.15408/aiq.v10i2.7171

Abstract: The literature related to the financial management acknowledges the significant role that political risk play to determine the financial market development. Further, financial system development (banking and financial markets) competes to provide long-term financing, and this competition might be positive or negative for each other. The aim of this paper is to propose a conceptual model/framework for investigating the role of political risk and financial market on Sukuk market development in Gulf Cooperation Council (GCC). GCC economies depend heavily on oil revenues which makes them subject to oil prices fluctuations. Therefore, GCC’s governments should diversify their economies by looking for Sukuk as an alternative source of financing, to cover their budget deficit, when the price of oil decreases, and reduce their reliance on oil, because Sukuk has advantages compared to the conventional bond particularly in terms of less information asymmetry. The prior studies have mostly focused on firms' characteristics determinants of Sukuk issuances but gave a little consideration to the role of country' characteristics on Sukuk market development. This paper proposes a framework to explain the political risk and financial markets determinants of Sukuk market development with a focus on the GCC countries that have the largest region in terms of the Islamic financial assets. It is anticipated that the outcome will support policymakers to improve the current state of Sukuk market.

Abstract: Sukuk have proven to be a significant innovation in the Islamic finance industry, introduced as an alternative to conventional bonds and securities. Aiming for fairer distribution of market risk between the haves and have-nots, Islamic finance focuses on funding the purchase of real assets rather than simply borrowing money. However, in reality, this requirement of “asset-backed” borrowing has limited the growth of the sukuk segment. We propose the application of blockchain technology to enhance the traceability of credit to the specific financed assets. Sukuk transactions can involve a number of parties, especially when sale, lease and agency contracts are combined. Some recent sukuk-default scandals transpired to have avoided “true sale” of underlying assets. Since the opinion of religious scholars can have a significant impact on the valuation of sukuk, we believe that the traceability of asset transfers will enhance sukuk credibility and valuation. Moreover, a smart contract infrastructure with blockchain security should also significantly reduce the execution time for such transactions. We present an initial model for blockchained sukuk-issue in this paper, highlighting the significant design features that specifically concern this niche market.

Abstract: This research is a case study of two Ijarah Sukuk issuances in two countries. One issued by central bank of Bahrain and matured in 2014 and the other was issued by the Malaysian company TSH Resources Bhd and matured in 2017. By adopting library research and document analaysis, this research examines the terms and conditions of both cases based on what has been disclosed in the prospectuses. Accordingly, this study presents the impact of the Time Value of Money (TVM) in these cases and how it differentiates between genuine Ijarah Sukuk and a duplicate-bond Sukuk. The study revealed that there were some Shari’ah non-compliance issues in the implementation of Sukuk concept in both cases in a way it emulates conventional instruments featured as guaranteed-return instruments, which take into account TVM as an essential compenent in calculating its returns. However, such practice has a major effect on the genuineness of Sukuk, in terms of Shari’ah-compliance risk.

Abstract: This research aims at investigating fa c tors that influence third parties funds (TPF) of Indonesian Islamic banks during the issuance of government retail sukuk 2012-2015. Data are taken from quarterly s tatistical reports of Indonesian Islamic banking and analysed by using multiple linear regression. The results show that r e t ai l sukuk has negative influence , while offices number, company size, and return for the third parties have positive influence on TPF collected . As having negative influence, Islamic banks should anticipate future issuance of retail sukuk by improving their internal performance. Failing to anticipate it, they may suffer of decreasing amount of TPF.

Abstract: Pakistan need to enhance the liquidity management framework for its growing Islamic finance industry. Sukuk is a best Shariah-compliant debt instrument for short term liquidity needs since Sukuk is highly tradable instrument with low level of market risk. In view of that, there is an increasing trend in the global issuances of corporate and sovereign Sukuk. Therefore, this case study aims to explore the issuance of Sukuk in Malaysia as an example. Malaysia is dominating the Sukuk Market and has been issuing Sukuk since 1990. The underlying structure of the proposed Sukuk model for Pakistan is Istisna that is an Islamic project bond. Pakistan has the potential to replicate the Sukuk model of Malaysia. However, it is required to have an active secondary trading market in order to develop an effective and dynamic Sukuk market.