The icon of Islamic capital market growth nowadays is the sukuk. Today, sukuk is becoming more international product and it has entered in all the major financial markets of the world. Azhar and Haider (2010) said that the total volume of sukuk market now is above USD150 billion. It shows an unbelievable success of growth in a very short period of time.
Besides, sukuk has a specific form in the structure of Islamic finance. Firstly, sukuk embarked as a benchmark for bond in the conventional system in the last several years, where the bond market increased rapidly. The appearance of sukuk in Islamic finance can attract the economic world. Secondly, sukuk rose significantly, when the condition of financial industries was in a serious crisis and
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Sukuk is an Arabic word and is the plural of ‘sakk’; which means “legal instrument, deed, or check”. Sukuk is considered as Shari’ah-compliant bonds, where bonds are defined as long-term debt obligations that are secured by a specified asset or a promise to pay (Al-Amine, …show more content…
When the global financial crisis hit the Gulf countries, investors began losing confidence in the market (RAM, 2010). Bad news such as the global financial crisis would influence the investors to reduce their trust and confidence in sukuk (Blinder, 2002). Confidence in the economy, and more specifically in the capital market, is an important catalyst for economic and financial growth. When the level of confidence increases during strong economics condition, investors want to buy sukuk. Conversely, when confidence decreases, risk-taking by sukuk investors tend to fall (Dailami & Masson, 2009).
Significant negative returns are associated with negative news. Such events will seriously diminish investors’ confidence in the Islamic financial system (Muhamed & Radzi, 2012). Investors prefer short- term maturity period to avoid maturity risk. But, issuers prefer long term maturity risk. There must be a balance between investors and issuers for the purpose of survival of sukuk market and confidence of investor. Thus, investors and issuers should maintain strategic investment for the benefit of both parties. To avoid such risk, risk depends on success of project (Ibrahim,
The data provided by the Near East Bank for the purposes of this study not only included 10 years of data (2004-2013) but also rendered all figures in 2013 USD. To facilitate calculation, these figures were then rendered into millions of USD. For reasons of privacy, the Near East Bank did not send identified data, as private banks in TRNC are not obligated to disclose their financial data to any party other than the Central Bank of TRNC itself.
If financial markets are instable, it will lead to sharp contraction of economic activity. For example, in this most recent financial crisis, a deterioration in financial institutions’ balance sheets, along with asset price decline and interest rate hikes increased market uncertainty thus, worsening what is called ‘adverse selection and moral hazard’. This is a serious dilemma created before business transactions occur which information is misleading and promotes doing business with the ‘most undesirable’ clients by a financial institution. In turn, these ‘most undesirable’ clients later engage in undesirable behavior. All of this leads to a decline in economic activity, more adverse selection and moral hazards, a banking crisis and further declining in economic activity. Ultimately, the banking crisis came and unanticipated price level increases and even further declines in economic activity.
Author provides some numbers, for the reader to find out about the situation in other companies. This article is totally related to the business, because it deals with the information, useful for the businessmen for decision making. The overview of the economical situation in the stock market is very useful for those people, whose businesses are closely connected to investments and gambling. Business can be strongly affected by the article, because the fed company can lose its potential investors and the gamblers can have a chance to avoid unnecessary loss. As a result the other companies can get more investors, and the investors more profit, but only in case, the author’s predictions are true. So, the article can generally decrease the number of gamblers involved into stock market in the nearest future.
Ritter, Lawrence R., Silber, William L., Udell, Gregory F. 2000, Money, banking, and Financial Markets, 10th edn, USA.
Encouragingly Jordan’s banking sector managed to weather the crisis better than other sector of the economy, and other banking sector in different countries. This was mainly supported by rather conservative policies and tight regulations. For instance banks in this country are pure universal. This implies there is no pure investment bank that relies entirely on investment income, a factor that majo...
The modern Islamic Finance industry is young, its timeline begin only a few decades ago. However, islamic finance is involving rapidly and continues to expend to serve a growing population of muslims as well as conventional.
Saudi Arabia’s capital market is considered to be young compared to other financial markets in the region. Saudi financial markets have been developing slowly because most enterprises in the country are either government owned or family-owned, most of which was funded through state budget, and as a result reduced the need for financing. In the recent past, Saudi Arabia has focused on a careful measurement for structural developments and regulatory changes. However, different phases of historical development of the capital market which can be classified into three phases; pre-industrialization phase, post industrialization phase and growth phase that sparked changes and shaped the kingdom 's capital market on
One might know that time is one of the most valuable assets in our lives. In the financial world the value of money is linked to time, primarily because investors expect progressive returns on their cash over periods of time, and they always compare the return from certain investments with the going or average returns in the market. Inflation on other hand erodes the purchasing power of money causing future value of one dollar to be less than the present value of a dollar. This paper will examine time value of money and the applications that determine successes or failures. An examination of the different vehicles that can be used to generate financial security for corporations and individuals will be provided. After defining the applications that generalize time value of money, an explanation will be offered regarding the components of interest rates by expanding on the concept that interest rate equates the future value of money with present value.
Debt crisis is becoming common and faced by most citizens in Malaysia. Between June 1997 and January 1998 a financial crisis swept like a brush fire through the "tiger economies" of SE Asian. Over the previous decade the SE Asian states of Thailand, Malaysia, Singapore, Indonesia, Hong Kong, and South Korea, had registered some of the most impressive economic growth rates in the world. Their economies had expanded by 6% to 9% per annum compounded, as measured by Gross Domestic Product. This Asian miracle, however, appeared to come to an sudden end in late 1997 when in one country after another, local stock markets and currency markets imploded. When the dust started to settle in January 1998 the stock markets in many of these states had lost over 70% of their value, their currencies had depreciated against the US dollar by a similar amount, and the once proud leaders of these nations had been forced to go cap in hand to the International Monetary Fund (IMF) to beg for a massive financial assistance. (W.L.Hill, n.d.)
What is the role of investor’s confidence in the financial markets? Why a downgrade of the US treasury sends ripples in the stock markets all over the world .How do investors react to such kind of information? Do we take all the information into account before...
As the world has recently passed through the global financial crisis that begun in 2008 in the USA with the banks’ collapsing, analysts are giving different opinions and making new economic hypothesizes about the origin of, as well as the process of different countries escaped from the crisis. Among all these new “theories”, the case of Islamic banks is interesting in terms of its nature and consequences. In my essay, I will try to highlight the basic principles of the Islamic finance, the reasons of the restriction of interest, the most important tools used by Islamic banks in economic activities and brief explanation of them, and finally my view point of the probable future improvement of the Islamic financial system.
Sources of finance are the different methods for a business to earn and obtain money. There are lots of ways to obtain money but two large basic sources of finance, which are the “owner’s capital” and “capital borrowed”. They are also called internal sources of finance and external sources of finance. In those sources, they are mainly divided in two groups, which are short-term sources of finance and long-term sources of finance.
In the modern world, financial markets play a significant role, with huge volumes of everyday dealings. They form part of contemporary economic lifestyle and determine the level of success of many people. Humans have always been uncertain of what the future holds and thus, tried to forecast it. The forecast of course cannot omit the likelihood of “easy money” by forecasting the prices of equity markets in the future.
The Islamic market is being very profitable, but the effectiveness of the operations has been relatively limited due to lack of development of the business unit due to the short existence of the moderm history.
As Mudharabah applies the concept of profit- sharing, the probability of attainment of profits or suffering of losses is resultant from economic activities. The maturity of Mudarabah Interbank Investment in the Islamic Interbank Money Market is possible to be an overnight basis, but yet Mudarabah Interbank Investment, within this short-term period can help contribute to the economic condition. The Islamic Interbank Money Market is destined for managing short-time period liquidity to support activities banks carry out, which is the usage of funds from the excess unit, to fund the shortage units, and to match or equalize the socioeconomic and financial needs between the two units. Mudarabah Interbank Investment, may actually indirectly contribute to economic growth as a part of the entire organization of the Islamic Financial Institutions needs Islamic Interbank Money Market to guarantee the continuousness of their businesses, and Mudarabah Interbank Investment is as a tool for this purpose. (Saiti, Hasan, & Adawiah, Islamic Capital Markets: Volatility, Performance and