Islamic Financing as Mechanism for Socio-Economic Development: A Conceptual Approach

Abstract

This study has critically reviewed both empirical and theoretical literature and the importance of Sukuk being an Islamic finance mechanism as a major player to solve socio-economic problems and human development in general. It is observed that Islamic finance products, especially Sukuk have gained prominence across the globe. Considering part of its importance to human life, previous studies have established that it is working successfully in several countries through the adoption of Sukuk to tackle socio-economic vices such as the alleviation of poverty, lack of shelter, illiteracy that in the long-run has positive impacts on the small and medium enterprise; economic; rural and sustainable development. Given this, the study focuses on the effectiveness of the concept of Sukuk as a mechanism to solve socio-economic vices listed above. As earlier mentioned, the Islamic finance market is succeeding with its approach in a comprehensive manner towards empowering people and their wellbeing. In support of this, the proceed generated from Sukuk investments can be used by investors to improve the education of their wards and personal health condition. The outcome of this study revealed that Islamic finance products, bearing Sukuk in mind is capable of solving socio-economics vices facing the world.

Shariah Issues of Ownership and Possession of Asset-Based Sukuk Structure: A Shariah Scholars’ Perspective

“…Sukuk is defined by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) as 'certificates of equal value representing undivided shares in the ownership of tangible assets, usufructs, and services or (in the ownership of) the assets of particular projects or special investment activity' (AAOIFI, 2010, p. 298). Furthermore, it is similarly defined as 'certificates of equal value put to use as common shares and rights of intangible assets, usufructs, and services or as equity in a project or investment activity' and this definition is supported by many researchers (Ahmed & Elsayed, 2018;Olaide & AbdulKareem, 2021;Smaoui & Khawaja, 2017;Godlewski et al, 2016;Asutay & Hakim, 2017;Mahmud et al, 2019). Sukuk investors are interested in the underlying asset of Sukuk, a project, an enterprise business, which enables them to receive incomes generated from the projects (Hasan et al, 2019).…”

La dinámica del desarrollo económico local con tendencia al crecimiento socioeconómico

“…Asimismo, el crecimiento socioeconómico es la capacidad que tiene una sociedad de expandir las posibilidades de producción de su propia economía (Fajardo et al, 2021), es decir, es el aumento progresivo de la elaboración y diversificación de los productos y servicios pertenecientes en una nación, con la inclusión de personas trabajadoras en la medida en que el mismo proceso de producción de bienes lo exija (Olaide & AbdulKareem, 2021). Según Ociepa-Kicińska et al ( 2021), mencionan que mediante el crecimiento socioeconómico que se analizan las riquezas monetarias de una empresa, sociedad o país, ya que este proceso es cuantificable, y su indicador más importante es el PBI o Producto Interno Bruto, que establece toda la producción de la nación en dólares por año.…”

Sukuk, Infrastructural Development and Economic Growth: A Theoretical Lens for Abandoned Projects in Nigeria

“…Investors can redeploy their capital or sell the Sukuk when they need. For the economy in general, Sukuk upgrades the distribution of wealth via investing in real projects that support the circulation of the wealth on a broader scale (Alkhawaja, 2019;Olaide & AbdulKareem, 2021).…”