Despite the Economic closeness of overall concept, Sukukization (Islamic Securitization) is not equal to ―Securitization‖ as it is known in its conventional sense. Securitization, generally relates to the converting of loans of various sorts into marketable securities by packaging the loans into pools and then selling shares of ownership in the pool itself. Sukukization, on the hand; refers to, Islamic Sukuk Investment (as defined by AAOIFI) are certificates of equal value representing undivided shares in ownership of tangible assets, usufruct and services.
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The Gulf Magazine December 2010
The International Shariah Research Academy for Islamic Finance November 2010
Standard and Poor’s 2010
International Monetary Fund 2010
Risk typically represents investments’ double-edged sword. Quantifying the adequate amount of risk to be assumed could be difficult, especially when “too much risk could turn out to be too little.” Under Islamic finance, managing risk is even more challenging. On the one hand, assuming high levels of risk is not encouraged. On the other, Islamic screening rules restrict investment and consequently stimulate risk. This paper considers the above dilemma by examining the effect of adopting screening rules on stock indices risk. The study, conducted using monthly data from FTSE Global Islamic, tests the hypothesis that the Islamic index yields adequate returns for the level of risk undertaken. Results show that the Islamic index surpasses the socially responsible index in performance while operating in line with the market. This risk assessment result does not resolve the dilemma but assures the economic appropriateness of the procedures adopted in managing the Islamic index.
Mohamed Ibrahim, Shahul Hameed International Centre for Education in Islamic Finance
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