Sukuk risks – a structured review of theoretical research

Abstract

Purpose

The key purpose of this study is to make awareness for faithful Muslims who are interested to invest in Islamic capital markets so as to enable them making right decision while considering investment in Sukuk over conventional interest-bearing bonds.

Design/methodology/approach

This study reviews past literature to analyse contemporary Sukuk risks and discusses several mechanisms to mitigate those risks.

Findings

The study shows that Sukuk can be good alternatives to conventional bonds. Sukuk structures need to be further developed to fulfil the Sharīʿah compliance requirements.

Research limitations/implications

This study is exploratory in nature, and as such, it seeks to identify the risks related to Sukuk issuance. Given this limitation, it did not provide empirical evidences relating to any specific category of Sukuk risks.

Practical implications

An in-depth knowledge of Sukuk risks would help both academicians and investors understand the potential problems related to Sukuk structures and take precautions in the early stage to prevent causes of being defaulted or bankrupt.

Originality/value

The risks related to Sukuk have been explored in all potential roots. This study has offered some significant techniques to prevent the relevant risks for investors’ benefits. Information being provided throughout this study is expected to serve potential investors in Sukuk as a guide to make right decisions and enable them to minimise the risk to secure healthy returns on their investments.

Citation

Hasan, R., Ahmad, A.U.F. and Parveen, T. (2019), "Sukuk risks – a structured review of theoretical research", Journal of Islamic Accounting and Business Research, Vol. 10 No. 1, pp. 35-49. https://doi.org/10.1108/JIABR-06-2015-0026