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Islamic finance at a crossroads : the dominance of the asset-based sukuk.

By Habib Ahmed

Abstract

In mimicking conventional finance, Islamic finance is focusing on the legalistic forms and ignoring the substance of Islamic law. Long-term growth of the industry will depend on the dominance of substance over the form.\ud \ud KEY POINTS\ud \ud * The principles of Islamic law governing financial transactions can bring about stability in the financial system.\ud \ud * However, by replicating conventional financial products and focusing on the legalistic forms only, the practice of the Islamic financial industry is diluting the principles of Islamic law.\ud \ud * In the sukuk market, the overwhelming majority of sukuk are asset-based with the primacy of form over substance.\ud \ud * Moving to a more substance-based Islamic finance is needed to reduce the reputation risk and integrity of the industry.\u

Publisher: LexisNexis
Year: 2010
OAI identifier: oai:dro.dur.ac.uk.OAI2:7736
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