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A Sukuk is a type of financial certificate which is mainly Islamic in nature and it is almost similar to the bond that are available in western finance. Sharia is also associated with the laws of Islamic religion. As the western finance bonds has different structure, so the issuer of sukuk sells the bond in a traditional way along with group of financer (Abdullah et al. 2014). The traditional form of paying the bond structure is mainly not permissible that is mainly used by the issuer at the time of purchasing of assets. This also includes the group of investors which consist of partial ownership. The actual contractual promise also includes the buyback of the bonds within the future data and the value would be at par (Nazar 2015). The western debt instrument that is traditional in nature is totally almost similar as sukuk in UAE and it is mainly created for linking the returns along with debts in the cash flow of the company. The assets that are being purchased by an organisation in the country also includes the effective distribution policy which would assist in maintaining of the financial certificate (Hasan 2015). Moreover, it cannot be used as the vehicle for investment which also points out the instrument of the financial tools and that would almost equivalent to Western interest payment bond.
The overall popularity of this particular financial tool that is sukuk has become famous in GCC countries in the year 2000 and it has been first issued in the country of Malaysia. The GCC countries has adopted it in the following year which follows the rules and regulation as per the Islamic cooperation and their policies (Smaoui and Nechi 2017). Islamic law mainly prohibits the interest from a certain amount of money and that have to be used in the process of distributing the overall benefits of the assets. It mainly help the investors for working in the area that have to be outlined by the sharia and would receive the debts of financing. The sukuk mainly represents the aggregate and undivided shares which would be included in the ownership in the tangible assets and its relation with the specific activity of its investment (Musari 2016). The investors that are associated with sukuk also points out the debt obligation that are not showed by the bond issuer as the own issuer of assets highlights the prices. As the investor do not own the debt obligation which own the piece of assets and that have to be included with the bond holders and receive a certain portion of the earnings that are directly associated with the assets. Some of the characteristics are included with sukuk mainly points out that both of the investors includes the payment screams and a sukuk investor receive the profit that are mainly generated by the process of underlying the assets (Ahmed, Islam and Alabdullah 2014). Both bonds and sukuk are primarily issued to the investors and both have to be considered to be the safer investment in overall equities.
Sukuk is also referred as the trust certificate which have to be associated with the investors and those have to be included with the similar kind of bonds. As it is a type of Islamic financial certificate, so it consist of certain rules and regulation which have to be followed during the process of bond profitability (Bo, Ali and Saiti 2016). It is generally appreciated for the interest rate along with the assets that included in the process of backing method. Sharia are also known as the asset backing assets and that have to be included with the bonds which might be financial as well as non financial business complaints. The involvement of asset ownership includes the bonds mainly points out the debt obligation and that have to be associated with the investors along with the payment streams. The trust certificate are mainly governed by the western law and that have to be structured as per the law of the country which is pretty much complicated in nature (Asutay and Hakim 2018). The associated organisation raises the funds that have to be created with the offshore trust certified issues along with the investors that highlights the payment streams. The company that raises funds mainly issues the trust certificates and that have to be included with the funding agreement in the GCC countries.
The aim of the research proposal is to point out the benefits and the risk that are associated with financing through issuance of sukuk in the GCC countries. It also points out the impact along with the advantages that are provided at the time of availing these financial certificates. The alternative civil structure of the law is also pointed at the scenario which have to be associated during the availing of the financial certificates.
The objectives of this research proposal is to highlights the benefits and limitation that are associated with financing through issuance of sukuk in the GCC countries. It also highlights the risk that might the assets that are involved during the process of implementing the financial certificates. The data that are used for the process of financing or the Islamic bonds has also been highlighted in the research by the sukuk.
The following are the research questions that have been gathered from different sources bout the benefits and risks which are associated with financing through issuance of susuk in GCC countries.
The research proposal is totally based on the benefits and risks that includes the issuance of finance of susuk. The certificates that have the overall equal value of the undivided ownership also includes the investments in the assets. Using of the Sariah principle mainly involves the risks that are associated with the financing and those have to be included with issuance in the GCC countries. Certain gap is present in the Islamic bonds and the global capital market which have to be associated with the investment of money along with the assets for generating the profit (Echchabi and IDRISS 2016). Moreover, the law which it includes the generation of money also act as the financial instrument that have to be involved in the process of training.
This particular chapter mainly points out the factors and impact of the process of financing by sukuk along with their benefits and risks. It also includes the overall concept of the financing along with the limitation and through issuance of sukuk.
Sukuk are the certificates which are equivalent to the bonds or the Islamic bonds and these are mainly referred in the GCC countries along with highlighting the overall nature of the bonds. The resources that are being acquired by an association within the nation too incorporates the viable dispersion approach which would help in keeping up of the financial certificate (Arundina, Omar and Kartiwi 2015). Additionally, it cannot be utilized as the vehicle for speculation which moreover focuses out the instrument of the money related devices which would nearly proportionate to Western interest payment bond. The conventional shape of paying the bond structure is basically not reasonable that is basically utilized by the guarantor at the time of acquiring of resources (Ismal et al. 2015). This moreover incorporates the gather of speculators which comprise of fractional proprietorship. The genuine contractual promise also incorporates the buyback of the bonds inside the long run information and the esteem would be at standard. The western debt instrument that is conventional in nature is completely nearly comparable as sukuk in UAE and it is primarily made for connecting the returns at the side obligations within the cash stream of the company.
Islamic law primarily disallows the intrigued from a certain sum of cash which got to be utilized within the process of dispersing the overall benefits of the resources. It primarily offer assistance the speculators for working within the zone that have to be laid out by the sharia and would get the obligations of financing (Oladunjoye 2014). The sukuk primarily speaks to the total and unified offers which would be included within the possession within the unmistakable resources and its connection with the particular action of its investment. The believe certificate are basically administered by the western law which need to be structured as per the law of the nation which is pretty much complicated in nature. The related association raises the stores that ought to be made with the seaward believe certified issues in conjunction with the speculators that highlights the instalment streams (Abdullah et al. 2014). The company that raises reserves primarily issues they believe certificates which got to be included with the subsidizing assertion within the GCC nations.
Sukuk plays a vital role in the process of financing which act as the development in the Islamic market along with the banking system. Complying with Sharia help in boosting the standard that would be beneficial on the society along with the economies (Chazi, Rao and Syed 2014). It also provides the large financing projects that points out the public goods which might not be possible for performing several economic activities. Sukuk are perfect for financing as these can be inserted into the interest based debt without falling the overall value. It also makes sukuk an important avenue as to highlight the wealth redistribution along with the social justice that have been achieved within a certain period of time (Manzoor, Karimirizi and Mostafavisani 2017). The use of susuk in the current economic condition mainly help the economics by developing the process of creating as well as producing certain feasibility by manipulating the others. Moreover, the Islamic finance is also based on the performance and the principles of justice and the fairness for better achievement by neglecting the Riba. The investors that associates with secondary market is associated with the investors that looks into the market in a more efficient way which is easy for liquidation. The investors that are present in the secondary markets mainly points out the investments that might get liquidate to find the sukuk a great deal (Raghibi and Oubdi 2018). The secondary market of Islamic securities also includes the cost of the certificates which mainly generated the profit and that have to be returned into a quick rate of interest.
Funds that are generally raised includes the crucial activities that mainly helps the overall infrastructure of the project. Selecting and managing the funds also help in highlighting the key factors that would be beneficial for the financial instrument and might led to mismanagement. The Islamic capital market highlights the funding scale which also points out the overall duration of allocation of financing with sukuk (Chermi and Jerbi 2014). The conventional financing method primarily points out the funds that are used for the process of financing. It is also considered as one kind of gambling in earlier days but now it has been considered as one of the most convenient way of payment. The financial instrument of Islamic bonds that are suited with the management of the funds often sells them on the secondary markets and those have to be associated with the liquidity of the assets. It moreover gives the expansive financing ventures that focuses out the open products which might not be conceivable for performing a few financial exercises. Sukuk are idealize for financing as these can be embedded into the intrigued based obligation without falling the by and large esteem (Oseni and Hassan 2015). It too makes sukuk a critical road as to highlight the riches redistribution in conjunction with the social equity that have been accomplished within a certain period of time. The utilization of susuk within the current financial condition basically offer assistance the financial matters by creating the method of making as well as creating certain achievability by controlling the others.
Figure 3.1: Research Onion
(Source: Saunders et al. 2007)
The research onion on a very basic level centres out the clear state of the investigate subject through which the investigator is required to require after for a compelling strategy. The basis of the research nearly is to be highlighted where it requires the by and colossal basis of the research around at the side certain strategy that are to be included interior they think about. The taking after step is the research around approach and it centres out the source by which the approaches would be made for the research about and those ought to be started insides the ask around.
The methodology through which the imperative information has been collected and dissected for the benefits of the research. Epistemology in a general sense refute to doxology for consolidates unmistakable sorts of basis and the research. This specific inquire roughly is based on positivism which proposes that the research around gives the positive information around the benefits and risk associated with financing through sukuk (Klein and Weill 2016). Positivism basically holds the significant data about the investigate around which gives the devotee a distant off predominant and more grounded advanced information about the issues that have been raised interior approximately.
It is the arrangement and strategy that are required to be utilized interior the research which centres out the major suspicions of the think roughly. It furthermore highlights the methodology that offer assistance the research around for certain wide questions and examination of the strategies that are required to be taken after all through the inquire around. The point by point handle of method of information collection is to be related with examination and those are to be pointed by the clarification of the outcomes about around of the research.
This mainly look at orchestrate basically centres out the duplicate or the blue print of collection at the side the measures and those are as well to be eviscerated with the information that have been collected. Specific sorts of look at organize are appear interior they think around which centres out the compelling orchestrate for inquiring around the achievability of efficiency by the clients. Exploratory design ask nearly organize and practical look at orchestrate are there three basic sort of look at orchestrate which are broadly utilized and open to any inspector (Khan 2016). The exploratory design for the examination would be related for the research since it comprises of the impacts of particular circumstance nearby the variable which are to be included with the research.
Data collection get ready of the procedure through which the sensible information are collected and measured following to the variable or factors. The data that has been collected for this particular research is from secondary data through which the knowledge of financing through sukuk can be obtained. The profitable handle which locks in the analyst to reply the research around questions adjoining to the test hypothesis and assessment of comes around. The issues and openings is required to be recognized for collection of data at the side setting the goals for the foremost portion handle of collection of data.
Sampling method is the way by which the test are being amassed for the research and the assessing of the test in expansion to be included with the examination. In this particular, research proposal several journals and websites have been selected for the process of collection of secondary data and certain themes are also been included for the process of thematic analysis.
It is one of the essential portion of the research which ought to be taken after in a specific way and got to be considered all through the investigator. All the data that have been included interior the examination are not obliged for collecting the data. All the information that have been collected from the banks are as per their availability on their particular location and none are compelled to do so. The information that have been collected are kept in a secure put in conjunction with making a distinction from Data Protection Act.
Abdullah, A.A., Yazid, A.S., Abdullah, A. and Kamarudin, M.S., 2014. Risk in funding infrastructure projects through sukuk or Islamic bonds. International Review of Management and Business Research, 3(2), p.915.
Abdullah, N., Sufian, A., Asenova, D. and Bailey, S.J., 2014, February. PPP/PFI in Malaysian Development Plans: Purpose, structure, implementation, financing and risk transfer. In proceedings of 5th Asia-Pacific business research conference (pp. 1-14).
Ahmed, E.R., Islam, M.A. and Alabdullah, T.T.Y., 2014. Islamic sukuk: Pricing mechanism and rating. Journal of Asian Scientific Research, 4(11), p.640.
Arundina, T., Omar, M.A. and Kartiwi, M., 2015. The predictive accuracy of Sukuk ratings; Multinomial Logistic and Neural Network inferences. Pacific-Basin Finance Journal, 34, pp.273-292.
Asutay, M. and Hakim, A., 2018. Exploring international economic integration through sukuk market connectivity: A network perspective. Research in International Business and Finance, 46, pp.77-94.
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Chermi, H. and Jerbi, Y., 2015. Sukuk as an Attractive Alternative of Funding and Investment in Tunisia. Journal of Emerging Economies & Islamic Research, 3(1).
Echchabi, A. and IDRISS, U., 2016. Does sukuk financing promote economic growth? An emphasis on the major issuing countries. TÜRK?YE ?SLAM ?KT?SADI DERG?S?, 3(2), pp.63-73.
Hasan, S., 2015. Contemporary Waqf Development through Sukuk. A research at the international Sharia Research Academy (ISRA) for Islamic Finance retrieved, 4.
Ismal, R., Muljawan, D., Chalid, M.R., Kashoogie, J. and Sastrosuwito, S., 2015. Awqaf linked sukuk to support the economic development. Occasional Paper Bank Indonesia, pp.1-29.
Khan, N., 2016. The role of Islamic finance in economic development. Lingnan Journal of Banking, Finance and Economics, 6(1), p.6.
Klein, P.O. and Weill, L., 2016. Why do companies issue sukuk?. Review of Financial Economics, 31, pp.26-33.
Manzoor, D., Karimirizi, M. and Mostafavisani, A., 2017. Financing infrastructure projects based on risk sharing model: Istisna sukuk. Journal of Emerging Economies & Islamic Research, 5(3).
Musari, K., 2016. Economic Sustainability For Islamic Nanofinance Through Waqf-Sukuk Linkage Program (Case Study In Indonesia). Uluslararas? ?slam Ekonomisi ve Finans? Ara?t?rmalar? Dergisi, 2(3), pp.73-94.
Nazar, J.K., 2015. Regulatory and financial implications of Sukuk’s legal challenges for sustainable Sukuk development in Islamic capital market. Ethics, Governance and Regulation in Islamic Finance, 135.
Oladunjoye, M.O., 2014. Sukuk as a tool for infrastructural development in Nigeria. Journal of Islamic Banking and Finance, 2(1), pp.335-344.
Oseni, U.A. and Hassan, M.K., 2015. Regulating the governing law clauses in Sukuk transactions. Journal of Banking Regulation, 16(3), pp.220-249.
Raghibi, A. and Oubdi, L., 2018. Sukuk-Waqf: The Islamic Solution for Public Finance Deficits. European Journal of Islamic Finance, (9).
Smaoui, H. and Nechi, S., 2017. Does sukuk market development spur economic growth?. Research in International Business and Finance, 41, pp.136-147
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