| Abstract: |
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. The development of innovative Economic
financial solutions in the Muslim world has been dormant for centuries. It is
only recently, since the early 1970s that significant work that has been done
in the field of Islamic Capital Market. In order to take benefit from Western
financial structures, care must be taken to make sure that the concepts are
acceptable by Shari’ah. The West has had significant success in linking the
End-Investor (Excess Capital) with the most optimal user of this Excess
Capital; be it the Stock Market, Debt Market or the Securitization structures,
they all serve the purpose of linking Capital with its most optimal (on a
risk-adjusted basis) user. It must be kept in mind, that even though the West
has had more success than the Muslim world in implementation of a financial
system, it has been plagued with constant cycles of boom and bust. The most
recent financial markets crisis has again opened the discussion for the need
of structural changes to the current financial models/instruments in place.
Most commentators have stressed for the need of more regulation whereas the
stress should be on making changes to the structural features of the financial
instruments. An in-depth discussion of the financial system is beyond the
scope of this article and for now the focus will only be on the Islamic
Securitization structures (Sukukization) for the housing capital market and
the relevant Economic factors. |