Sukuk: a potential for stability and development in the GCC

Taoual, Safiyah (2016) Sukuk: a potential for stability and development in the GCC. (Discussion Paper) Kingston upon Thames, U.K. : Faculty of Arts and Social Sciences, Kingston University. 37 p. (Economics Discussion Papers, no. 2016-07)

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This paper explores the significance of Islamic Sukuk instruments for stability in the GCC. As a result of the financial crisis of 2007-2008, interest in financial stability has increased. Islamic scholars suggest that Islamic financial institutions and products have the potential to contribute in achieving a more stable economic environment. This paper analyses Sukuk, an Islamic financial instrument with both bond and equity traits; and how it can contribute to achieving a more sound and resilient economic environment in the GCC. Findings suggest that Sukuk do have the potential to effectively contribute to the GCC’s economic stability; as long as they adhere to the pure Islamic financial principles and avoid trying to be comparable to conventional bonds. Currently, however there appears a heavy reliance on shorter term issuances, along with the majority of issuances in the USD, a heavy reliance on real estate as both a means of financing an underlying collateral in Islamic securitization; elements which could be destabilising especially during destress. The originality of this paper lies in its empirical contribution, as it, for the first, time sets out systematically the characteristics of Sukuk issuance in the GCC region with respect to Sukuk maturity, issuance currency and sectoral distribution. It also assesses the various Sukuk structures and the underlying risks involved; as well as the impact of collateral in Islamic securitization.

Item Type: Monograph (Discussion Paper)
Uncontrolled Keywords: Islamic Finance; Sukuk; Financial stability; GCC; Development
Research Area: Economics and econometrics
Faculty, School or Research Centre: Faculty of Arts and Social Sciences (until 2017) > School of Economics, History and Politics (from November 2012)
Depositing User: Andrea Ingianni
Date Deposited: 14 Apr 2016 14:01
Last Modified: 14 Apr 2016 14:01
DOI: 2016-07

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