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Green sukuk is a tool to finance climate change which has garnered considerable attention. However, having only recently come into existence has its own set of challenges for this tool that require immediate identification and government intervention to intensify its growth. This study aims to explore the challenges encountered by green sukuk issuers and the structure of a reconciled green sukuk issuance framework to speed up the market’s growth with the right interventions.

The study engaged a qualitative approach via multiple case study interviews with green sukuk issuers and used expert views for data triangulation to generate the findings. A total of four green sukuk issuers participated in the interviews, and for data triangulation purposes, four expert’s opinions and views were considered. The thematic analysis technique is used to report the findings.

It was revealed that amongst the challenges encountered in the green sukuk market are shoddy green taxonomy, difficulty in identifying green assets, it is time-consuming and costly, no compelling benefits and exposure to higher-risk profiles.

This study may be influenced by observer error and observer bias. However, the researchers have taken cautious steps to overcome these issues by following strict case study methodology procedures and triangulating the qualitative research findings with views from green sukuk experts. These interventions increased the rigour and trustworthiness of the results.

This study is amongst the pioneer in Malaysia, exploring challenges in the green sukuk market. The results are relevant to governments, regulators, institutions and central banks to structure the right interventions to counter the challenges. Greater government involvement is required to strengthen the green sukuk market and to spearhead the green agenda.

This study aims to explore the opportunities and challenges in activating a Smart Contract to enhance the efficiency and effectiveness of Ṣukūk offerings in the Islamic capital market.

The study adopts a mono-method qualitative approach. Data were obtained from survey interviews of two issuances on the fusion of smart contracts in Ṣukūk structures that were Sharīʿah-compliant. A thematic approach was further used to analyze the interview data based on the onion research method while opportunities and challenges of activating the Smart Ṣukūk (SṢ) relied on doctrinal evidence.

The results from the issuances across two jurisdictions showed that deployment of SṢ can resolve contractual ambiguities arising from Sharīʿah interpretations, jurisdictional policies and legal regime issues, which affect Ṣukūk origination and issuances especially on the right of investors in the event of Ṣukūk defaults. Although SṢ is automated, the third party’s presence is not eliminated as the blockchain platform still relies on the validators who are usually blockchain developers functioning as a third party in the Ṣukūk chain.

The study relies on doctrinal literature to explain the features and requirements of SṢ. The empirical approach is limited to interview data based on local SṢ issuances. Future studies need to explore regulators’ role and global standards in cross-border issuance of SṢ with multiple jurisdictions/laws.

The paper concludes that the offering of SṢ using local currency has been successful in the two issuances because of the facilitative regulatory environment. However, addressing Ṣukūk’s challenges in cross-border offerings would require guidance from international standard-setters such as the Accounting and Auditing Organization for Islamic Financial Institutions and the Islamic Financial Services Board.

This study is an advanced application of smart contracts to alleviate the related Ṣukūk challenges in the Islamic capital market.

This study aims to explore the underlying issues related to the development of socially responsible investment (SRI) sukuk in Malaysia. It identifies factors attracting investors and issuers, as well as challenges for the development of SRI sukuk (Islamic bond) in Malaysia.

This study conducted semi-structured interviews to collect data from the institutional investors, SRI sukuk issuers and arrangers, as well as researchers. A total of 19 experts were approached in which 10 participated in the interview. The thematic analysis technique is used to report the findings.

This study uncovers that social contribution through business activities (i.e. investment in the education sector) is the key motivational drivers for the investors and issuers. Besides, investment risks, lack of performance measurement standards, high transaction costs, risks of return, shortage of enough Islamic bonds, investors’ confidence and lack of awareness are the major challenges for the development of SRI sukuk instruments.

Due to the challenges in finding experts on this subject matter, this study was able to manage only 10 interviews from the participants, which is a small sample size. However, the findings of this study cannot be ignored. Future research should carry out with a large sample size (i.e. at least 30 interviews) to validate the current findings.

This study is among the pioneer in Malaysia, which explores the influencing factors of selecting Islamic bonds as an investment option. This paper provides some valuable implications for investors through discovering the challenges for the growth of SRI sukuk in Malaysia, which can also be applicable in a global setting.

Sukuk are popular means for governments to raise money through sovereign issues, and for corporations to obtain finance through corporate sukuk offerings. The purpose of this study is to critically examine the issues revolving around various aspects of sukuk such as regulation, performance and future challenges from different Asian market jurisdictions.

Using various sukuk structures and other literatures, this chapter critically investigates some general legal and regulatory requirements for sukuk issuance, its required infrastructure in various jurisdictions in addition to some other relevant important issues to generate cash flows and raise finance through Islamic capital market (ICM) operations without violating the tenets of Sharī’ah in sukuk structures which ultimately helps the economic growth of the Asian region.

The study finds that in many Asian countries, a separate and specialised regulatory framework, as demanded by sukuk, is lacking and this instrument is treated under the same regulations as of conventional capital markets and their instruments. Some of the regulations may be appropriate for ICM and sukuk, however, most of these regulations need proper modification in order to treat sukuk with clear understanding.

Being part of a niche and new area of Islamic finance in the global financial market a plethora of confusion exists regarding various aspects of sukuk including regulation, performance and future challenges particularly in Asian jurisdiction where sukuk are largely in operation. Findings from this study can be used as a reference to understand the need of the proper modification of conventional regulations, the performance of sukuk in better ways, and meeting other relevant challenges.

Although the demands for having specialised regulatory framework of sukuk, or at least amendments in the current framework for conventional bonds is gaining momentum worldwide in order to accommodate sukuk in the capital markets according to their peculiar nature, it has not caught much attention of researchers and practitioners involved with Islamic finance. Therefore, this study is expected to add value to regulation, standardisation and performance of sukuk in the Asian market, and it deals with the obstacles in the growth of sukuk, which were not extensively covered earlier by the researchers and the Islamic finance industry practitioners.

Participatory contracts reflect the true spirit of Islamic finance. However, these contracts face several challenges during their implementation. This is reflected by the low volume of contracts processed by Islamic banks and the low number of Sukuk issued. This study aims to introduce a new parameter related to the valuation of Sukuk Musharakah when the underlying asset is a joint venture.

The author applies the Gordon & Shapiro model on the valuation of Sukuk Musharakah with a joint venture as underlying. A new pricing framework is introduced with several usual parameters such as the profit and loss sharing ratio, besides a new parameter, which is the dividend payout ratio. The framework shall contain price, duration and convexity computation. The new framework differs from the classic bond pricing methodology broadly used nowadays in determination of Sukuk prices.

The results indicate that negotiating only the profit and loss sharing ratio is not sufficient to have a fair price of Sukuk Musharakah when the underlying is a joint venture. It is due to the mismatch of interest between investors and issuers. Thus, another parameter should be negotiated which is the dividend payout ratio.

The research focuses exclusively on Sukuk Musharakah with joint venture as underlying. Also, the choice of Gordon & Shapiro formula, by definition of the model, restricts the calculation of the net asset value by using only the future expected dividends with constant growth. This choice is made primarily to explain the objective of this paper in a simple way.

For investors, a compatible pricing framework with the underlying flows and risks of an asset is essential to create a liquid market. This work would help investors to boost the Sukuk Musharakah market.

Several studies have analyzed the various challenges in Sukuk markets. Few of them dealt with specificities of Sukuk Musharakah by focusing on the underlying nature. So far, the profit and loss sharing ratio is the only parameter analyzed in these studies. Thus, the authors contribute to the literature by studying other parameters that can solve the various challenges of Sukuk Markets.

COVID-19 has disrupted the economic development of both advanced and emerging markets. In addition to the stimulus packages to adjust the economic shock from COVID-19, regulators around the world are searching for innovative mechanisms to rebuild the economy. The purpose of this paper is to explore the potential of SRI Sukuk to serve as an Islamic social finance solution for development projects to mitigate the adverse economic effects of COVID-19.

This study uses a mixed-method research framework. The authors use a systematic literature review following the recommendations of Bowen (2009) to identify critical challenges financing PPP projects using SRI Sukuk. In the next phase, the authors interview participants involved in an SRI Sukuk financed PPP project to get more significant insights on the challenges identified through the literature review process.

The authors identify the need for greater transparency for SRI financed PPP projects. Also, organisational and legislative challenges are limiting the attractiveness of SRI Sukuk as a financing mechanisms for post-COVID development projects.

SRI Sukuk is an emerging financing concept, and the use of such an Islamic financial instrument in financing development projects can serve as a viable alternative for policymakers in a post-COVID economic environment.

The successful completion of the development projects integrating the concept of Social Maslahah through SRI Sukuk in Malaysia could encourage other emerging economies to use such innovative Islamic financial instrument for economic development in post-COVID environment.

This paper is unique, as it provides evidence on the potential of SRI Sukuk to finance large scale public-private partnership projects.

This paper aims to explore issues arising from ṣukūk (Islamic bonds) on blockchain, including Sharīʾah (Islamic law) and legal matters.

A qualitative methodology is used in conducting this research where relevant literature on ṣukūk was reviewed. Through a doctrinal approach, the paper presents analyses on the practice of ṣukūk and ṣukūk on blockchain by discussing its legal, Sharīʾah and regulatory issues. This culminates in a conceptual analysis of blockchain ṣukūk and its peculiar challenges.

This paper reveals that digitizing ṣukūk issuance through blockchain remedies certain inefficiencies associated with ṣukūk transactions. Indeed, structuring ṣukūk on a blockchain platform can increase transparency of underlying ṣukūk assets and cash flows in addition to reducing costs and the number of intermediaries in ṣukūk transactions. The paper likewise brings to light legal, regulatory, Sharīʾah and cyber risks associated with ṣukūk on blockchain that confront investors, practitioners and regulators. This calls for deeper collaboration in research among Sharīʾah scholars, lawyers, regulators and information technology experts.

As a pioneering subject, the paper notes the prospects of blockchain ṣukūk and the current dearth of literature on it. The paper would assist relevant Islamic capital market entities and authorities to determine the potential and impact of blockchain ṣukūk in their respective businesses and the financial system.

Blockchain ṣukūk will assist in addressing issues inherent in classical ṣukūk and in paving the way to innovative solutions that will facilitate and enhance the quality of ṣukūk transactions. For that, ṣukūk would require appropriate regulatory technology to address its governance and regulation peculiarities.

Integrating ṣukūk with blockchain technology will add value to it. The paper advances the idea that blockchain ṣukūk revolutionises ṣukūk and enhances its practice against known inadequacies.

This study aims to investigate the extent of Shariah compliance in wakalah sukuk and Shariah non-compliant risk disclosure in the sukuk documents and to analyse the risk management techniques associated with the disclosed risks.

This study uses qualitative document analysis as both data collection and analysis methods. The document analysis acts as a data collection method for 23 wakalah sukuk documents selected from 32 issuances of wakalah sukuk from 2017 to 2021. These sukuk documents were selected based on their availability from relevant websites. Document analysis, both content analysis and thematic analysis, were used to analyse the data. Codes were grounded from that data through keywords search of Shariah noncompliant risk and its risk management. Besides these, interviews were also conducted with four active industry players, i.e. two legal advisors of wakalah sukuk, a wakalah sukuk trustee and a sukuk institutional issuer. These interview data were analysed based on categorical themes, on the aspects of the extent of Shariah compliance in sukuk, and the participant’s views on the risk management techniques associated with the risks or used in the sukuk documents.

Overall, the findings reveal three types of Shariah non-compliant risks disclosed in the sukuk documents and seven risk management techniques associated with them. However, the disclosure and the risk management techniques can be considered minimal in contrast to the extent of Shariah compliance in a sukuk, i.e. Shariah compliance at the pre-issuance stage, ongoing stage and post-issuance stage. On top of these, it was also found from the interviews that not all risk management techniques are workable to manage Shariah non-compliant risk in sukuk. As a result, these findings suggest rigorous reviews of the existing Shariah non-compliance risk (SNCR) disclosures and risk management techniques by the relevant parties.

Sukuk documents used in the study are limited to corporate wakalah sukuk issued in Malaysia. Out of 32 issuances from 2015 to 2021, only 23 documents are available in relevant website. Thus, Shariah non-compliant risk disclosure and its risk management techniques analysed in this study are only limited in those documents.

The findings of this study suggest rigorous reviews on the existing Shariah non-compliance disclosures and risk management techniques. Other than these, future research in relation to uncommon risk management clauses, i.e. assurance, Shariah waiver and transfer of risk, are needed.

The insights presented in the analysis are of importance to sukuk issuers and the sukuk due diligence working group in enhancing the sukuk Shariah compliance and Shariah non-compliant risks disclosure and towards sukuk investors, in capturing and assessing Shariah non-compliant risks in a sukuk and to assist them to make informed investment decisions. More importantly, this study has found few areas of future study in relation to SNCR disclosures and SNCR risk management techniques.

Green sukuk (GS) is an emerging financial tool that has gained momentum in recent years owing to increased attention being given to Islamic finance, socially responsible investing (SRI) and sustainability agendas. Yet, GS studies are fragmented, dispersed and lack comprehensive reviews. As a response to this gap in academia, this paper aims to synthesize the knowledge on GS into thematic clusters, providing a more comprehensive understanding of the subject and offering guidelines for future research.

This study implemented a systematic literature review approach to analyse studies on GS that were published prior to and including June 2023. The PRISMA 2020 protocol was used in the sample selection process. A total of 62 peer-reviewed journal articles from six databases were identified and categorized into various themes.

The results suggest that previous research has predominantly focused on the areas of GS advantages, drivers, market development and potential sectors, along with challenges and recommendations to improve the market. However, it was found that some other aspects, including GS pricing, performance and purchasing intention, require further research attention. The analysis also indicated that the use of theories in the GS context was limited, with only five theories employed in just four out of the 62 articles examined. Moreover, this paper’s findings revealed that the studies employing quantitative and empirical analysis methods were limited to four articles. Geographically, most of the studies were conducted in Indonesia and Malaysia, while other countries with high-potential markets (e.g. GCC) had limited GS practices and studies.

The results of this study have several practical implications. For investors, a review of GS will provide greater insight into the understanding of the GS market, helping them make better investment decisions. For policymakers, this paper empowers them with the knowledge to make informed decisions regarding GS markets by highlighting key recommendations identified in the literature. Finally, the proposed guidelines can be used in future research.

While Green Bonds have received significant attention, there is a dearth of research on GS and those that exist are fragmented. A systematic literature review is necessary to identify knowledge gaps for future research.

Sukuk restructuring primarily aims at offering a debtor more latitude, in form and time, to settle his obligations. To meet Shari’ah requirements of transferring assets to Sukuk holders in asset-based Sukuk, the originator usually transfers the beneficial ownership to the issuer special purpose vehicles (SPV). However, in asset-backed Sukuk, the originator sells the underlying asset to an SPV and Sukuk holders do not have recourse to the originator in the event of defaults. Among some key unresolved Shari’ah issues in this regard is whether a change of contract necessitates entering a new contract. Other related issues that conflict with the tenets of Shari’ah are: (1) Sukuk structuring on tangible assets and debts; (2) receiving the full title by the Sukuk holders to the underlying assets in the event of default in case of securities that are publicized as asset backed; (3) Sukuk’s similarity with interest bearing conventional bonds: (a) capital guarantee by the originator or third party, (b) the originators’ promise to repurchase Sukuk at face value upon their redemption, and (c) providing internal and external credit enhancement. The Shari’ah-compliance of the above-mentioned clauses and structures of Sukuk remain debated among the Shari’ah scholars. Based on some specific cases, this study examines the Shari’ah viewpoint on sukuk restructuring and potential solutions to these unresolved Shari’ah issues in light of the past and recent declaration of some Sukuk defaults as non-Shari’ah complaints. Undoubtedly, resolution of these and other unresolved issues pertaining to Sukuk defaults can help strengthen the confidence of investors in Islamic capital market structures.