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This paper aims to reviews Sukuk risk classification schemes based on extending and adapting the risk classification schemes of conventional finance. It is then argued that risk classification schemes based on Sukuk structure provide significant insights into Sukuk risk not obtainable from conventional schemes. This is because Sukuk structure risk classification schemes link Sukuk risk more directly to the fundamental causal factors creating those risks. These links are less evident in conventional risk classification schemes. It is hypothesised that Sukuk structure risk factors will prove to be highly significant in multifactor expected return regressions.

The paper argues that, given the paucity of the empirical data currently available to researchers in Islamic finance, greater care needs to be taken in hypothesis development than is necessary for conventional finance. The limited data available should be used for testing hypotheses and not “wasted” in hypothesis formation. Through a meta-analysis of the existing literature on Sukuk risk, it is hypothesised that Sukuk structure risks will be highly significant in explaining Sukuk returns and returns volatilities in empirical tests.

The main Sukuk structures, debt based, equity based, assets based, agency based and hybrid structures, arise directly from the requirement of Sukuk to conform to the Shariah and to the fundamental ethical principles of Islamic finance and business. Further, Sukuk risk profiles are directly related to Sukuk structures. Thus, Sukuk structure risks are essentially Shariah risks. The paper presents a Sukuk risk classification matrix based on an evaluation of Sukuk structure risks.

The findings on the relation of Sukuk risks to Sukuk structures require corroboration by rigorous empirical tests.

The paper contributes to work on the creation of evidence-based risk management techniques in Islamic finance and to the expansion of ethical financial management.

The paper is one of the early detailed academic studies on the evaluation of risks arising from Sukuk structures.

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.