Risk Management In Islamic Finance The Sakuk Bonds' Analysis

This study's main frame about risk management in Islamic finance,takes a smaller area which is the Sakuk as bonds certificate that are critical to the general and standards concepts of finance which the Islamic financial system is adopting.It can initially be predicted that such no-interest financial system would create financing risks in the first place since investors and financers lose a major incentive of investment,but on the other hand the situation is not necessarily this simple or direct because the whole system is based on this no-interest principle.This study hypothesizes that sukuk which are the Islamic version of bond certificates necessarily involve the common types of risks,and the likely types of risks more than others is financing risk.This study aims at examining the Sak bond structure financing risk by creating Cash-Flow Patterns of Suk bonds' Fair Market Value from data of a comparison table along with conventional bonds;along with applying equations for valuing liquidity and cash flows of the given total values issuance/outstanding for credit and liquidity financing risk in both types of securities Ijarah(lease)and Muarbaha(sale contracts).Types of risks and degrees in the Islamic financial system,significantly differs from the worldwide applicable conventional finance(bonds)because the first one is based on the Islamic faith which prohibits several dealings ahead of which interest.Bonds(Sukuk)and shares of stocks are included in these differences both of the risks underlying and their risk is managed.The findings confirm the higher Sukuk financing risks both credit and liquidity types compared to the conventional finance bonds.