The effectiveness of sukuk in Islamic finance market

Abstract

Over the past decade, Islamic finance has been growing at an average rate of more than 30 percent per year. This impressive performance has greatly benefited many national economies, irrespective of faith or race by fostering significant growth and increased employment opportunities. No doubt, Islamic finance has been identified as one of the important growth areas for the National Key Economic Activities. Today, sukuk ( Islamic bond ) is among the most successful Islamic financial product in the industry and be one of the fastest-growing sectors in the global financial landscape. But, this sufficient operation are still new in the market, only a few research have been undertaken on this topic. In view of this limitation, this article aims to explore the practice and prospect of sukuk market in Malaysia. The application and mechanics of sukuk market will be discussed. It is also aims to look at the differences between the sukuk market and the conventional market. Subsequently, understanding of it among the investors were also examined and opportunities and challenges that need to be addressed will be reviewed. As will be evident in this article, this system has its own advantages and value added which would make it the system of choice in meeting specific investment interests and needs.