Islamic Finance at a crossroads: the dominance of the asset-based sukuk

Ahmed, Habib

Abstract

In mimicking conventional finance, Islamic finance is focusing on the legalistic forms and ignoring the substance of Islamic law. Long-term growth of the industry will depend on the dominance of substance over the form. KEY POINTS * The principles of Islamic law governing financial transactions can bring about stability in the financial system. * However, by replicating conventional financial products and focusing on the legalistic forms only, the practice of the Islamic financial industry is diluting the principles of Islamic law. * In the sukuk market, the overwhelming majority of sukuk are asset-based with the primacy of form over substance. * Moving to a more substance-based Islamic finance is needed to reduce the reputation risk and integrity of the industry.

Citation

Ahmed, H. (2010). Islamic Finance at a crossroads: the dominance of the asset-based sukuk. Butterworths journal of international banking and financial law, 25(6), 366-367

• Journal Article Type: Article
• Publication Date: Jun 1, 2010
• Deposit Date: Dec 22, 2010
• Publicly Available Date: Jan 27, 2011
• Journal: Butterworths journal of international banking and financial law.
• Print ISSN: 0269-2694
• Publisher: LexisNexis
• Peer Reviewed: Peer Reviewed
• Volume: 25
• Issue: 6
• Pages: 366-367
• Public URL: https://durham-repository.worktribe.com/output/1545162
• Publisher URL: http://lnbconnect.co.uk/vmchk/Journals/Butterworths-Journal-of-International-Banking-and-Financial-Law.html