Islamic Finance

In a global economy, not all economic units are following the same socio-economic regime, but a predominant majority is pursuing a capitalistic economic system, propagating a free market economy concept, with checks and balances through regulations and a support system in the form of welfare economies. The socio-economic system of Islam too espouses a market economy but with a system of rights and obligations from the smallest or weakest elements and units to the largest and strongest socio-economic units. The regulatory system of Islam, called the Sharia’h defines the nature and sphere of activities of the Islamic socio-economic system. It is a code of conduct for every aspect of life, including business activities as well as religious and social activities. The Sharia’h is based on the divine revelations of the Qura’n and the Sunnah ( the preaching and practice of the Holy Prophet Mohammad ( Peace Be Upon Him)).
Innovations in Finance create new products and the success of new products depends on how they provide better solutions to their market than the existing products available. It takes a while to understand and observe the actual impact of such products on the stakeholders as well as the market and economies. Nevertheless, the innovators do attempt to beat or sideline the given regulations and make room for their own interests to be fulfilled. Hence it becomes necessary to evaluate products for their true worth and meaning. This is why it becomes all the more important to study together products and their regulatory issues, particularly discussing the products’ impact on all stakeholders and the socio-economic system. While the Sharia’h defines the sphere of activity of Islamic financial cum business system, there is ample room for development and creativity within those bounds.

This research work analyses sukuk structures as innovative products of Islamic Finance. These sukuk are individually approved by Sharia’h boards and are assumed to be Sharia’h... [continues]

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