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This study aims to analyse the facts of the case in the judgement made by the High Court of Justice, England, UK, in the case of Dana Gas Public Joint Stock Company (PJSC) v. Dana Gas Sukuk Limited (Ltd.) and Ors.

This study uses descriptive and juristic analysis to explain the factual terms in the case of Dana Gas sukuk default. It also uses juristic opinions to analyse the underpinning argument in the Dana Gas court case between the decision of Sharjah Court, UAE, and the English Court, UK.

The study concluded that despite the position of Dana Gas PJSC that specific element of the muḍārabah sukuk is non-Sharī’ah-compliant, the English court decision which established the enforceability of the purchase undertaking seems to be fair based on the Islamic maxims such as “Difficult situation cannot violate the right of other” and “The conditional matters among Muslims are binding.”

The impact of this study is that Dana Gas sukuk default has thought stakeholders of Sukuk investment lessons on the importance of documentation and consideration of tighter clauses to ensure its bindingness in the law court. Hence, this study is expected to be a contribution towards the call for standardization of the role of Sharī’ah scholars across the globe.

This study illustrates the fact in the case of Dana Gas sukuk default and analyses the court’s decision from a fiqh perspective.

This study aims to explain the Sukuk structures individually by highlighting the key differences and commonalities in their influential aspects. It also compares the core aspects of Sukuk literature with conventional bonds and suggests the point of differences between them.

This study uses a quali-quantitative approach with the help of segmented bibliometric analysis to describe core differences and commonalities in various Sukuk structures in terms of core authors, countries, sources, affiliation, documents and keywords. In addition, it deploys “biblioshiny” from R-package “bibliometrix 3.0” to identify key influential aspects of different Sukuk instruments.

Results reported that Malaysia is the core contributing country in Sukuk publications and the center of author correspondence. There is a structural difference among various Sukuk instruments. The significant literature commonalities in Ijarah, Mudarabah, Musharakah and Murabahah Sukuk affiliations and globally cited journal articles are also found. However, the influential aspects of Sukuk compared with conventional bonds are different from other Sukuk literature. It also conducted a keyword analysis to report significant themes in the literature.

This study contributes to the existing body of knowledge as it helps investors to understand the shariah permissibility and investment supremacy of various Sukuk alternatives. Investors, policymakers, scholars and researchers should understand the dynamics of multiple Sukuk structures and their Shari’ah permissibility. This study significantly elaborates on this objective.

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.

The purpose of this paper is to examine incentives for risk shifting in debt- and equity-based contracts based on the critiques of the similarities between sukuk and bonds.

This paper uses a theoretical and mathematical model to investigate whether incentives for risk taking exist in: debt contracts; and equity contracts.

Based on this theoretical model, it argues that risk shifting behaviour exists in debt contracts only because debt naturally gives rise to risk shifting behaviour when the transaction takes place. In contrast, equity contracts, by their very nature, involve sharing transactional risk and returns and are thus thought to make risk shifting behaviour undesirable. Nonetheless, previous researchers have found that equity-based financing also might carry risk shifting incentives. Even so, this paper argues that the amount of capital provided and the underlying assets must be considered, especially in the event of default. Through mathematical modelling, this element of equity financing can make risk shifting unattractive, thus making equity financing more distinct than debt financing.

Global awareness of the dangers of debt should be increased as a means of reducing the amount of debt outstanding globally. Although some regulators suggest that sukuk replaces debt, they must also be aware that imitative sukuk poses the same threat to efforts to avoid debt. In short, efforts to ensure future financial stability cannot address only debts or bonds but must also address those types of sukuk that mirrors bonds in their operation. In the wake of the global financial crisis, amid the frantic search for ways of protecting against future financial shocks, this analysis aims to help create future stability by encouraging market players to avoid debt-based activities and promoting equity-based instruments.

This paper’s findings are relevant for countries that feature more than one type of financial market (e.g. Islamic and conventional) because risk shifting behaviour can degrade economic and financial stability.

This paper differs from the previous literature in two important ways, viewing risk shifting behaviour not only in relation to debt or bonds but also when set against debt-based sukuk, which has been subjected to similar criticism. Indeed, to the extent that debts and bonds encourage risk shifting behaviour and threaten the entire financial system, so, too, can imitation sukuk or debt-based sukuk. Second, this paper is unique in exploring the ability of equity features to curb equityholders’ incentive to engage in risk shifting behaviour. Such an examination is necessary for the wake of the global financial crisis, for researchers and economists now agree that risk shifting must be controlled.

This paper identified the ṣukūk structure suitable for deficit financing during the COVID-19 crisis. The study also explored the relevant Sharīʿah contracts that could be utilized to issue ṣukūk that is suitable for various jurisdictions and corporations in handling deficit financing during the COVID-19 crisis.

The authors have adopted a qualitative research approach in which primary and secondary sources available on the subject were reviewed, especially a number of cases related to ṣukūk structures prior to and during the COVID-19 crisis and analyzed their performances and drawn their conclusions.

The outcome of this paper suggests that certain ṣukūk structures used during the COVID-19 crisis aimed primarily at financing deficit have been successful. Furthermore, these ṣukūk structures are relied very much on the obligator’s/issuer’s cash flow position. It has been revealed that if the ṣukūk is structured on equity-based contracts with lower repayment amount or no payment, it would not trigger default because the nature of this ṣukūk is the sharing of profit and loss, in accordance with a Sharīʿah rule that there will be compensation for any loss only if deliberate and notable negligence is proven. However, if it is debt based or ijarah and wakalah contracts, then the payment to ṣukūk holders ought to be made as agreed and if not, it will trigger default. This payment is to be made from the cash flow of the issuer and if there is an issue in the cash flow of the issuer due to COVID-19, consent from the ṣukūk holders needs to be obtained to reschedule payment as found in the case of the Garuda Indonesia ṣukūk. However, as found in MASB’s IMTN ṣukūk case, if the cash flow of the company is good, then the chances of default are very slim. However, so far, three new ṣukūk in the middle of COVID-19 were issued, one by a corporation and two issued by a sovereign, one of which addresses the liquidity issues during the pandemic, and all these proved that ṣukūk is definitely a viable alternative mode for deficit financing and a reliable option during the COVID-19 pandemic.

This paper looked into the ṣukūk structure, especially the ṣukūk which are yet to mature and the new ṣukūk issued during the crisis caused by the COVID-19 pandemic.

It is anticipated that the outcome of this research will assist the stakeholders in ṣukūk markets to understand the ṣukūk impact on COVID-19 related deficit financing and suggest various structures that could be utilized in the ṣukūk market in an unprecedented situation such as the COVID-19 economic distress.

Looking at the social aspect of ṣukūk markets, this paper has endeavored to provide solutions to the financing of deficit for social well-being as a tool to provide relief and social stability in the lives of the people.

The novel COVID-19 pandemic has caused unprecedented economic difficulties and market distress on a global scale; and this research sought to identify the relevant ṣukūk structures to be used for deficit financing during the pandemic crisis, especially the ṣukūk which are yet to mature and new ṣukūk issued during the pandemic crisis. The former includes HDFC Muḍārabah ṣukūk (2019) Maldives and MAHB ṣukūk/IMTN program (2010) Malaysia, while the latter includes IsDB Trust Certificates, Phase 2 of the tranches (2020), the Federal Government of Nigeria Road ṣukūk (May, 2020) and Sharj’ah Government two billion Dirham ṣukūk (June, 2020).

The purpose of this paper is to examine the extent of risk shifting behavior in bonds and sukuk. The examination is significant, as economists and scholars identify risk shifting as the primary cause of the global financial crisis. Yet, the dangers of this debt-financing feature are largely ignored – one needs to only witness the record growth of global debt even after the global financial crisis.

To identify the signs of risk shifting existence in the corporations, this paper compares each corporation’s operating risk before and after issuing debt. Operating risk or risk of a firm’s activities is measured using the volatility of the operating earnings or coefficient variation of earning before interest, tax, depreciation and amortization (EBITDA). Using EBITDA as the variable offers one distinct advantage to using asset volatility as previous research has – EBITDA can be extracted directly from firms’ accounting data and is not model-specific.

Risk shifting can be found in not only the bond system but also the debt-based sukuk system – a noteworthy finding because sukuk, supposedly in a different class from bonds, have been criticized in some quarters for their apparent similarity to bonds. On the other hand, this study thus shows that equity feature, when it is embedded in bonds (as in convertible bonds) or when a financial instrument is based purely on equity (as in equity-based sukuk), the incentive to shift the risk can be mitigated.

Global awareness of the dangers of debt should be increased as a means of reducing the amount of debt outstanding globally. Although some regulators suggest that sukuk replace debt, they must also be aware that imitative sukuk pose the same threat to efforts to avoid debt. In short, efforts to ensure future financial stability cannot address only debts or bonds but must also address those types of sukuk that mirror bonds in their operation. In the wake of the global financial crisis, amid the frantic search for ways of protecting against future financial shocks, this analysis aims to help create future stability by encouraging market players to avoid debt-based activities.

This paper differs from the previous literature in two important ways, viewing risk shifting behavior not only in relation to debt or bonds but also when set against debt-based sukuk, which has been subjected to similar criticism. Indeed, to the extent that debts and bonds encourage risk shifting behavior and threaten the entire financial system, so, too, can imitation sukuk or debt-based sukuk. Second, this paper is unique in exploring the ability of equity features to curb equity holders’ incentive to engage in risk shifting behavior. Such an examination is necessary for the wake of the global financial crisis, for researchers and economists now agree that risk shifting must be a controlled behavior – and that one way of controlling risk shifting is by implementing the risk sharing feature of equity-based financing into the financial system.

This study aims to identify the factors that influence the willingness of Bangladeshi retail investors to invest in ṣukūk.

The authors surveyed Bangladeshi retail investors using a structured questionnaire to understand their perspectives on potential investment in ṣukūk. The authors considered the behavioral aspects of retail investors and the desired ṣukūk features to analyze the demand side. Factors and regression analyses were performed to identify the persuading factors.

The results indicate that investor awareness is a fundamental factor in potential investments in ṣukūk. Investors perceive the security represented by government and third-party guarantees as a persuasive feature of ṣukūk. The tradability and tenor of ṣukūk also affect the investment intention. Sharīʿah consciousness of the investors also plays a significant role in their investment decisions.

One limitation of this study is that it incorporates potential individual investors only, and precludes institutional investors. In the future, there is scope for research to explore the demand factors impacting institutional investors of ṣukūk in Bangladesh.

The authors expect that the study will aid policymakers and ṣukūk issuers in crafting strategies to cater to the needs of Bangladeshi retail investors.

This study is the earliest research conducted in Bangladesh to determine the factors impacting the willingness of individual investors to make their potential investments in ṣukūk. To the best of the authors' knowledge, no study has analyzed the desired ṣukūk features from the perspective of Bangladeshi retail investors.

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.

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.

The objectives of this paper are two-fold: first, to empirically compare and contrast the salient features of three financial instruments (FIs), namely sustainable and responsible investment (SRI) ṣukūk, social impact bonds (SIBs) and conventional bonds (CBs) and second, to examine the differences between the perceptions of the investors and the developers on the features of the three FIs.

Using a questionnaire survey, 251 completed and useable responses were received, representing a 42.54% response rate. In examining the differences and similarities in the characteristics of the three FIs, the inferential statistical of frequency and percentage were used. Wilcoxon and Mann–Whitney tests were conducted to investigate the differences in the salient features of the three FIs and the differences between the investors and developers' perceptions on the salient features of SRI ṣukūk, SIBs and CBs, respectively.

The results reveal that stakeholders view SRI ṣukūk, SIBs and CBs to be statistically significantly different from each other. This shows that stakeholders do not view SRI ṣukūk as “old wine in a new Sharīʿah-compliant bottle” but instead considered different from SIBs and CBs. Furthermore, stakeholders also differentiate between SIBs and CBs.

The paper provides empirical evidence that Islamic finance (IF) instrument, represented by SRI ṣukūk, is viewed as different instruments to conventional tools, represented by SIBs and CBs. First, it debunks the notion that IF is viewed as similar to its conventional counterpart. Second, SIBs are seen as different from CBs, illustrating the distinct categorisation of impact investing instruments. As such, third, the development of SRI ṣukūk and SIBs can provide diversification to portfolios as it is a unique instrument in the social finance and financial market.