IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/74938.html
   My bibliography  Save this paper

Current Issues of the Sukuk Market and Using Sukuk for the Global Infrastructure Projects

Author

Listed:
  • Söylemez, Arif Orçun

Abstract

The sukuk market has proven its usefulness as a significant source of capital for the public and private sector entities. As a result, the sukuk market has gained great popularity both in the Islamic and the non-Islamic countries. The sukuk market has a flexible nature in product structuring and poised to grow even further. On the other hand, the public financing of infrastructure is a worldwide problem in today’s world. World Economic Forum reports an annual infrastructure financing gap of $1 trillion. As a fast growing segment of the Islamic finance, the sukuk market has significant potential to bridge that gap. However, only a small part of the great potential of sukuk has been released until now. Although huge as it is today, the sukuk market still suffers from the illiquidity of the secondary market for sukuk instruments. The yield curve for sukuk products is still incomplete and regular sovereign issuances is most needed as part of governments’ debt financing programs. That could serve as a benchmark for pricing so corporate sukuk market could develop further. However, there are a myriad questions to answer regarding the public financial management issues before making sukuk issuances an integral part of sovereign debt management policies. Safety nets, resolution frameworks are missing in many jurisdictions. Investors are facing many more risks beyond the conventional fixed-income instruments but they are not adequately protected. There are many complex sukuk structures but there is not sufficient harmonization of shari’ah ruling or legal treatment regarding those products at the international level. Once these problems were resolved, the sukuk market in theory could be much more useful in providing funds to infrastructure projects all around the world. This paper documents the contemporary issues that need to be addressed in the sukuk market and discusses whether the sukuk market could be used to channelize the needed funds for the infrastructural projects.

Suggested Citation

  • Söylemez, Arif Orçun, 2016. "Current Issues of the Sukuk Market and Using Sukuk for the Global Infrastructure Projects," MPRA Paper 74938, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:74938
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/74938/1/MPRA_paper_74938.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Sukuk; Infrastructure Financing Gap; Islamic Finance;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • H29 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:74938. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.