The whole research study is based on the Future of Islamic Bonds (SUKUK) in Kuwait. As per the recent market condition of the Kuwait, the economy has faced some of the major changes due to the global financial crisis. The GDP of Kuwait is forecasted to be 3.7% at the end of the year 2013 and the forecasted GDP for year 2014 is 3.3%. As per the analysis of the Kuwait market, there has been analysed an improvement in the performance of the economy during 2012 and is expected to be in the year 2013 (Ahmed, 2010). Due to the improvement in the market condition the inflation rate of the market is also analyzed to be declined from 6% to 3.5% during the end of the year 2012.
The research is based on the concept of analyzing the market in Kuwait for the Islamic bonds. The study deeply analyzes the Islamic Bonds (SUKUK) along with the future aspects. The research basically focuses on the issues that are reflecting the growth rate of the Islamic Bonds (SUKUK) in the Kuwait market. The major significance of the study is that it will determine the actual value of the Islamic Bonds (SUKUK) in the global market and will also help to understand the relation of the Kuwait economy on the band's growth (Ahmed, 2010).
The Islamic finance industry is finding the way where Islamic business obtains finance and save the investment of individual for long term purpose. The increasing demand for investment alternative in the form of bonds and securities has made progress in some Islamic community. Reputed organizations have used the Islamic bonds to prevent their financial support by proposal of the organization SUKUK. Islamic SUKUK is different from the conventional bond (Alajmi, Dennis and Altayab, 2011). SUKUK has acquired the ownership of a given asset or service. SUKUK transfer’s the assets future cash flow into present cash flow (Sharjah Islamic Bank Picks Banks For Sukuk Sale, 2013). SUKUK can be issued on an available date in future. Islamic bonds are planned in such a way that it generates returns to investors as per the law of Islam. In a specific project investment activity, SUKUK provides unbroken shares in possession of tangible assets (Al-Harshani, 2008).
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Recently, SUKUK has been the important approach for the acquisition of financial resources not only by Islamic governments but also by multinational companies. SUKUK was the first Islamic financial industry incorporated in the year 2000. Three hundred and thirty six million U.S. dollar is spent on the Islamic financial industry. As the SUKUK progress, high demand was generated for investment options by Islamic businessman. Change in SUKUK turns to be an admired alternative for many investors. In year 2006, twenty seven billion U.S. dollar was protected by SUKUK funds (Alhumoud and Al-Kandari, 2008).
The sale of Islamic bond has reached $ 30 billion internationally. The reason of increasing Islamic bonds was a large amount of government expenditure and a government initiative has increased the reputation of Shariah-compliant products. The use of Islamic bond has protected the financing side of the capital market. The Islamic capital market is one of the important elements and rapid growing area of Islamic finance (Alhumoud and Al-Kandari, 2008). The issue arises that many Islamic bond structures are dependent on the sovereign credit. The use of SUKUK is growing in other areas like:
This word is derived from the Islamic law. It provides guidelines regarding religion, politics, banking, business and law. Islamic financial instruments are used to control the financial activities like credit, savings, investment and trade. As per the market condition of Kuwait, the economy has faced some major challenges due to global financial crisis. Islamic finance evades the speculative investments such as derivatives (). Derivative refers to the instrument which is derived from one or more underlying financial asset.
The occurrence of global financial crisis in Kuwait affects the conventional banks (Al-Muharrami, 2008). The Islamic banking industry has put his positive position in international markets. Due to the presence of global financial crisis, the Islamic financial industry was less affected because financial transactions are backed by physical assets. Islamic bonds are exposed to fluctuations in the mortgage market because of their high activity in real estate sector (Almujamed, Fifield and Power, 2013).
The expertise has encouraged the Islamic finance industry to develop the modernism especially in the area of risk management. The principle of derivative in Islamic finance is notorious because of speculation and uncertainty in the market. The future value of Islamic bond helps to understand the economy of the bond growth in Kuwait. The issues faced by Islamic bonds are challenging for the Islamic finance industry (Almujamed, Fifield and Power, 2013).
Islamic bonds are granted to the people are Salam securities. In this seller supply commodities to the buyer by ensuring that they will get extra return on bond at a particular future date. The product is sold to the buyer at a current price. Another type of bond is known as Ijarah bond. In this band, there is a leasing agreement between the lessee and the leaser. Lessees are called mustajir and the lesser is called Agra.
Another bond is Istisna’s bonds, it is a project in which payments are made in advance to the supplier and labour before they start and export the material to the finance industry (Al-Salem, 2009). The payments are done by the Islamic banks. When the project is completed, the advances are repaid from the supplier. Last type of bond is Musharaka bonds, in these the people who have invested in the bond will get the variable return instead of fixed return (Anjum, 2008).
Islamic SUKUK is basically a legal instrument or deed. SUKUK in general can be explained as a Shariah compliant i.e. bond. To make it more simplify, it means ownership of an asset or its instrument. The claim that made in SUKUK is not just to claim for cash flow but it is claimed for the ownership. May be understood as a Shariah compliant? Bond? In its simplest form SUKUK represents ownership of an asset or its usufruct. The claim embodied in SUKUK is not simply a claim to cash flow but an ownership claim. SUKUK is completely different from conventional bond and is latter to proceed over interest (Darrat, Topuz, and Yousef, 2003).
SUKUK word is originated from the word “SUK”, this word was used in middle age as a paper work obligation used for trade and commercial purpose. However, the present scenario of SUKUK is totally different from the SUKUK that was used in middle age. Now a day it was used as a conventional concept of securitization, which means the underlying assets is transferred to a large number of investors through certificates showing the relevant value of the assets (Gait and Worthington, 2008).
The market of SUKUK in the year 2001 was noted to be less than $500 million but as the time passes and the people gaining interest in the Islamic bonds and the result of it in 2007 it increases to $60 billion. But later on, a sudden fall is seen in Islamic bonds in the year 2008 because of this an additional investment by the Kuwait firm of $100m are invested (Jamaldeen, 2013).
This led to an investor that whether they can claim for the assets or not? Is the SUKUK is proven to be fruitful against the conventional bonds because it contains the tangible assets in them (Hesse, Jobst and Sole, 2008). Slowly and gradually, the financial market of Kuwait arising from inflation. Their money is getting value and the market condition started growing. In the year 2012, it is noted that the market of Kuwait in terms of SUKUK reached at peak and the people was feeling so secure and the new investor come up with their investment plan (Joshi and Al-Modhahki, 2003).
Now to talk about the type of bonds that are being issued to the people are Salam securities, in this seller sell or undertake to supply commodities to the buyer assure them that they will get the advanced price in the future or return. But the seller sells them at the current price to the buyer. Ijarah bond, it is a leasing agreement between the lessee and the leaser. Lessee called as mustajir and the leaser called as ujrah (ISLAMIC FINANCE, 2009).
Next is Istisna’a bonds, it is a project in which the payment is made in advance to the supplier and the labour by an Islamic bank. Once the project completed, the advances are repaid from the revenue derives from the project. Musharaka bonds, in those bonds people who have invested or buy these bonds will not be getting the fixed return rather they may get the variable return. This is called musharaka bonds (Khalfan, and Gough, 2002).
The main principle on which the Islamic finance operates is to maintain proper balance between the lenders and the borrowers so that both the parties benefit from it. All the financial transactions which are associated with an Islamic finance focus on direct participation in asset performance, that is, the asset layer (Laldin, 2008).
And thus provide the obligations and rights to the lenders to receive periodic payments from the borrowers. Within Shari’ah law, sale and purchase of debt instrument, to make income, are prohibited as this law does not encourage the contractual claims which are surrounded by legal uncertainty and discourages all those economic activities and assets which generate profit without real transfer (Masood, Khan and Ahmad, 2011).
Moreover, Islamic finance does not give permission to financial activities such as firearms, alcohol, gambling, adult entertainment, pork, etc. But, Shari’ah law allows all those financial transactions in which the investment risk is shared by both borrower and the lender and moreover, the profit generated by the transaction is in line with the Islamic prescriptions. In addition, it states that if any transaction does not result in income, in that case the lender is not entitled for any returns (Masood, Niazi, and Ahmad, 2011).
The Islamic banks are expanding their operations in the conventional system, therefore, it is very essential to determine whether the Islamic banks are financial stable or not as compared to the conventional banks. The risk posed by the Islamic banks to the financial system is different in many ways as compared to the risk posed by the conventional banking. Islamic contracts present direct risk to the financial system whereas, governance, legal activities and liquidity management infrastructure of Islamic banks present indirect risk to the financial system. For instance, the direct credit risk shifts to the investors from the banks in case of PLS financing. But in contrast, the assets side of the bank’s balance sheet becomes more risky as because of this, the Islamic banks becomes more susceptible to the risk as most of the risk is borne by the equity investor and not the holder of the debt (Salem, 2009).
Moreover, as the Islamic money market is not viable, there are higher chances that it may have to face liquidity risks. Apart from this, the Islamic banks even cannot hedge certain kind of risks as Islamic finance does not allow the use of conventional derivatives (Al-Amine, 2011). Further, most of the Islamic banks have underdeveloped infrastructure, and they operate in the environment which does not provide proper access to the government securities, money market and intervene facility. In addition to this, they do not have proper access to the supporting facilities provided by the central bank (Ali, 2005)
Although, in the last few years, this difference has been reduced to some extent due to improvement in the Islamic money market, and development of the Islamic lender-of-last resort model. Further, most of the authorities have also committed to provide liquidity support to the Islamic banks at the time of contingency (Siddiqui, 2008)
On the other hand, some features of the Islamic banking make it less vulnerable as compared to the conventional banks. The best feature is their ability to resist the negative shocks presented by their asset side of the balance sheet. In addition to this, risk sharing agreement also helps the Islamic banks in reducing the risk (Siswantoro, 2012).
The Islamic banks are under huge pressure to become more conservative, as, to remain competitive in the market they need to deliver competitive and stable returns to their investors and must have proper access to liquidity. Further, since investors also share some amount of risks, they also have right to oversight the management. Apart from this, Islamic banks lack in short term investment opportunities, this is because, they have deposited large amounts in reserve accounts with the central bank as compared to the conventional banks to hedge their large chunk of traditional assets. So, as compared to conventional investment, Islamic investments are more risky, but if considered from the financial stability perspective, it is still not sure whether they are risky or not because Islamic banks have bigger buffers that can offset the risky situation (Solé, 2008).
The Islamic capital market has seen lots of movements in the recent years. All credit goes to the demand of alternative investments among the investors. Because of this, Islamic capital market securities are also demanded high among the public sector entities and corporations across the world. The most influential role in this regard is played by the asset securitization. Due to restriction on asset backing, limited credit transactions have been executed. In this section, economic and legal implication of Shari’ah compliances will be reviewed, that will help in better understanding of Islamic capital market (Adam and Thomas, 2004).
As the Islamic finance sector is growing rapidly, many Muslim investors are showing interest in the Islamic investment products. Among all the Islamic investment products, investors are giving more attention towards structured finance instruments (Adam and Thomas, 2004.).
The structured investment product Sukuk introduced by the Islamic finance is similar to covered bonds or conventional asset backed securities (ABS), but its provisions and structure is significantly different from covered bonds or conventional asset backed securities. Sukuk are similar to Islamic securitization and transforms risk between lenders and the borrower. Moreover, Sukuk are identical to mortgage pass-through. The only difference is that in this a portion of the underlying asset is owned by an investor (Al-Amine, 2011).
This section of the literature review will try to find out the various challenges faced by the Islamic finance. Recently some changes have been made in the structure of Sukuk, which may result in decline of the popularity of the Islamic capital market products.
In 2008, Accounting and Auditing Organization of Islamic Finance Institutions and the Shari’ah committee recommended some changes regarding investment guarantee, asset ownership, trading, etc. These changes were so effective that even before their implementation; they got lot of attention by the investors. Most of the Sukuk violates the profit-loss sharing agreement and does not go with the Shari’ah law. Market participants and investors are analyzing these recommendations and try to determine till what extent it can cause damage to the Sukuk market.
Due to limited breadth and depth, the Sukuk market is facing the problem of illiquidity. The main reason behind this is the banks of Middle East. These banks have bigger buffer for capital and liquidity, and because of this, not much funding is available for the Sukuk. Another limitation of Sukuk in the money market is that they are available at the maturity of 3, 5 and ten years and are not available for any short term investment.
As most of the investors wanted to invest their saving or deposit for short period, but in the absence of any short term maturity product of Sukuk, they are not able to attract investors in the money market. Presently, Islamic banks are considered to be the largest buyer of the long maturity Sukuk and Shari’ah compliant products, still shorter tenors issuers will provide them more advantage. Many market players and investors believes that in coming years, there will be launching of some Sukuk funds and it will eliminate the liquidity constraints. But at the same time they also believe that it will create the problem of supply constraints. Moreover, presently it is also not possible to diversify the Sukuk funds.
So, it can be concluded that without transparent and efficient capital market and without appropriate laws and framework, it looks very difficult for the Islamic capital market to grow or to maintain its performance in the coming years.
Presently, the most important challenge faced by the Islamic banks is liquidity. Since the portfolio of tradable Islamic money market instrument is very limited and the systematic liquidity infrastructure of the Islamic capital market is also weak, thus, the Islamic banks are finding it very difficult to maintain liquidity. Further, there is not a single short term Shari’rh complaint Islamic money market instrument in US dollars or in local currency and in addition to this, the Islamic repo markets are also underdeveloped. All these parameters are responsible for the illiquidity position of Islamic banks. Apart from this, the long maturity money market instruments which are based on commodity murabaha transactions of mark up financing also many times results in loss as the brokers are unreliable and have low credit worthiness. Another disadvantage of Islamic banks as compared to commercial banks is that they over nightly deposit their money without any interest with their central banks.
So, in the absence of viable alternative money market instruments, lack of liquidity and competitive disadvantage, the performance and growth of the local Islamic banks are hampering and it may even result in liquidity crisis. In order to overcome the shortcomings of the Islamic money market, many investment banks are developing new, better and complex products which grumble with Shai’ah law. Therefore, the coming years are very important from the Islamic money market point of view, as in the coming years many changes will be seen in Islamic money market that may either positively or negatively affect the performance and growth of it. Further, it will be also interesting to see whether these products are going to generate enough demand so that Islamic money market can be developed in future.
Still, most of the products of the Islamic banks and its business model are homogeneous and Shari’ah compliance further intensifies the risk associated with the process implementation and product configuration. Success of Islamic banks in the recent years has resulted in the mushrooming of many Islamic banks, but the main limitation of all the banks is that all the Islamic banks are operating on the same business model. There is crisis in the lending activities and much of buffering is further adding more difficulties. Moreover, problems are also arising due to diverse set of accounting standards which huge differ from each other and are different in different jurisdictions. In order to overcome from the problem of heterogeneity and complexity, it is very essential for the Islamic banks to design and set simple legal standard contracts. Furthermore, implementation of developed IT infrastructure will further help the Islamic banks to monitor the activities and will help in eliminating the possibilities of non compliance. This will also eliminate the problem of invalid transactions.
The major segment of the research report is generally the research methodology, as the whole success of the research depends upon it. All the issues that are linked to the topic are presented for the brief analysis of the research topic. This segment explains all the methods, tools and techniques that are related and need to be included in the study. The choice of the methods and tools for the research is done on the basis of the approved topic. All the approaches and fundamentals that are related to the approved topic are detailed as per the practical concept.
The research topic that has been decided is The Future of Islamic Bonds (SUKUK) in Kuwait. The research is focused on the issues that are in relation to the future growth rate of the SUKUK in the market of Kuwait. The research will mainly highlight the recent market value of the SUKUK. The research will demonstrate the fluctuations of the financial market of Kuwait and the measures that are adopted for controlling them. As per the pre-decided goals and objectives of the research study, various kinds of the research methodologies, techniques and philosophies are used for the fulfillment of the objectives and aim of the research. All the data are collected after a detailed study of the nature of the data. The relevant part of the data is also checked in relation to the approved topic.
The major aspect of the research is the comparison of the Kuwait GDP with the growth of the future growth rate of the Islamic bonds (SUKUK). To determine the actual future of the Islamic bonds (SUKUK) in the market of the Kuwait, it is needed to analyze the actual growth rate of the Kuwait market in the current scenario. Through comparison of the GDP of Kuwait and SUKUK bonds, the actual goal of the research topic will be justified.
The major part of the research is the collection of the data and critical analysis of the data as per the requirement. To perform these functions, the researcher needs to follow some philosophy, which will design the actual shape of the research report. It is the basic requirement of the researcher to decide and choose the best pattern for processing the investigation. As per the need of the research there are three philosophies that are used i.e. realism, positivism and interpretivism.
All of them have their own importance. Now, as far as the realism is concerned, it is generally applied when the researcher is studying the basis real trends and the perception of the variables. In case of the positivism, there is a use of large sample size for the investigation and analysis where as in case of the interpretivism there is use of small sample size for the investigation.
As per the approved topic Islamic bonds (SUKUK), the best research philosophy that is applied is the positivism paradigm. As per positivism paradigm, the researcher is able to focus on the recent market scenario of the SUKUK. Along with this the researcher will also be able to analyze the fluctuations of the financial market of Kuwait. Through the analysis of the current market situation, the researcher is able to forecast the actual growth rate of the Islamic bonds (SUKUK) in the Kuwait market. Therefore, for the completion of the present research this is the best choice.
The proceeding step in a particular research depends on the research design. The research design is the blueprint of the research that suggests the path to the researcher and eradicates the chances of errors. The process from the collection of the data for the interpretation of the data is done as per the planning of the research design. Generally, there are three types of the research design, which are included in every research study. They are mainly exploratory, descriptive and causal research designs.
For analyzing the future growth of the Islamic bonds (SUKUK) in Kuwait market, the best design suitable is the descriptive research. Due to the application of the descriptive research design, the researcher is able to determine all the key factors that are associated with the Islamic bonds (SUKUK). This kind of the study will help to extract and express the major issues that are arising as the major barriers for the Islamic bonds (SUKUK). Through the descriptive research, the researcher is able to rectify some of the measures that can be adopted by the Islamic bonds (SUKUK) for creating the future market in Kuwait. The recent market condition is linked with the future growth of the Islamic bonds (SUKUK) in the financial market of Kuwait.
For completing this research study, research approaches have been used, which determine the nature of the study. In general basis, there are two types of the approaches that are used in every type of the research study. The first is the inductance and the other is the deductive approach. In case of the inductive the researcher proceeds by analyzing the nature of the study and understands the topic.
After the completion of the analysis part, the researcher collects information for the approved topic and analysis them according to the aim and objectives of the research. After the analysis of the data the researcher tries to derive a new theory that is appropriate to define the actual objectives of the study. In case of the deductive approach, the researcher collect the data and analysis them with the help of hypothetical testing and compare them the any of the suitable existing theories.
In relation to the topic chosen, the approach that is applicable in this report is the deductive approach. As per the concept of the deductive approach, the researcher utilizes the information that is available to him and concludes the major findings of the research. Due to the application of this approach, the researcher is able to determine the actual market condition of the Kuwait market and determine the actual future growth of for the Islamic bonds (SUKUK). The hypothesis formulation is also done in the following research
During the application of this approach in the present study, there will be a comparison of the GDP of the Kuwait and the growth rate of the Islamic bonds (SUKUK). These two variables are analyzed for getting the actual figure of the future growth of the Islamic bonds (SUKUK) in the Kuwait market.
As per as the concept of the data collections concern, there are two types of the techniques for collecting information. They are basically primary sources and secondary sources. For the satisfaction of the research aim and objectives, there is a need that the researcher uses both the types of the sources. In case of the primary sources, the complication is more rather than in the case of adopting secondary sources.
For the collection of the primary data, the researcher uses different techniques such as questionnaire method, interview through telephones, group discussions etc. In the present research, some of the economic expert reviews have been included. On the other hand, the secondary data are collected from all the articles that are available in different authenticated website and blogs. Along with this PDFs and journals are also included in the collection of the secondary data. In the present case of the Islamic bonds, the data have been included from different government websites. Along with the collection of the data from the internal sources, the report has also covered some of the external sources such as blogs of different economic analysts. The same context the articles and the previous research papers have also been collected for extracting the exact results. This kind of variations in the resources will help to get the actual figures and facts which are helpful for the completion of the research report.
The analysis part of the report is the major part of the researcher as this reflects the face of the whole study. In this chapter the researcher utilizes the various data that are collected by the researcher through various surveys. All the data that are collected are analyzed for getting the actual outcome of the research. For the analysis the data are first arranged in a systematic manner so that the study of the data becomes easier for the researcher. The part of the recommendation and conclusion depends upon how the data are analyzed.
As per the discussion above the two processes that have been adopted are qualitative and quantitative analysis techniques. As per the nature of the approved topic, the best technique that can be used is the mixture of the both quantitative analysis and qualitative analysis.
During the analysis through the quantitative analysis the research has proceeded through the preparation of the different themes based on the questionnaire. In others, the thematic analysis is followed in the present report. The themes are prepared in such a way that the researcher can determine various patterns based on the themes. The themes will help the researcher to analyze the response of the respondents.
Based on the topic, the respondents that have been involved in the research are the share market analyst of Kuwait. As to analyze the growth of the Islamic bonds (SUKUK) is in related to the share market, so they are chosen for the approved topic.
Now for the analysis of the secondary issues that are related to the Islamic bonds are analyzed through the use of qualitative analysis. During the analysis through the qualitative method the research has proceeded through regression analysis between the various variables that are related to the topic. All the descriptive statistics have been used for the analysis of the future growth of the Islamic bonds in the market of Kuwait. The statistical analysis will not only help to get the exact conclusion of the report but also support the thematic analysis part of the report.
The conclusion will be clearer from both the approaches used in the report. The variables that have been chosen are for the regression analysis are the GDP of Kuwait and growth rate of Islamic bonds. Among these the dependent variable is the growth rate of the Islamic bonds and the independent variable will be GDP of Kuwait.
As per the above study, there is a chance for the development of the Islamic bonds in the Kuwait. As per the market analysis during the research, the equity and the other traders on the market are responsible for the development of the market trust and the belief. As per the analysis of the secondary market of the Kuwait, there are majority populations that are in the favour of the Islamic bonds (SUKUK).
There are three major sectors that are affecting the secondary market of the Kuwait along with the development of the Islamic bonds (SUKUK). Firstly the management of the Kuwait Stock Exchange is responsible for the development of the Islamic bonds (SUKUK).
Then, there is almost an unregulated secondary market for the Islamic bonds (SUKUK) but still the market can be developed in the future. So for attracting the investors in the Kuwait market, there is a requirement to establish new infrastructure and logical services. In the current study it is concluded that there is a requirement to manage the prices of the Islamic bonds (SUKUK) to become the future star of in the Kuwait stock exchange. Secondly the support of the government of Kuwait is also responsible for the development of the new market for Islamic bonds (SUKUK). As per the analysis of the Islamic bonds (SUKUK) future in the Kuwait, the government is in the process of controlling the elements of the market and for this development there is a requirement of the Islamic bonds (SUKUK).
As per the analysis of the GDP growth rate of the Kuwait and growth rate of Islamic bonds (SUKUK), there is a positive relationship between the both. Therefore this is an indication of the development of the new market for the Islamic bonds (SUKUK) in Kuwait.
As per the analysis of the Islamic bonds (SUKUK), there are chances for the development basically in the secondary market. It is not possible to analyze the market of Islamic bonds (SUKUK) by taking in the view the present condition of the market but the projection is possible as per growth of the Islamic bonds (SUKUK) in Malaysia. There are many factors that are responsible for the development of the domestic Islamic bonds Secondary Market. Some of the factors are the income level of the investors, the variety of the Islamic bonds etc.
Islamic banking industry should plan to issue an Islamic-compliant for arrangement of future funding. Islamic firms may raise Islamic liquidity pool for an option of finance. Earlier the business environment of the Kuwait was not ready to accept the SUKUK Secondary market because secondary market deals with the new issue of shares. After the second half of the year 21012-13, that is, after the drop of the financial system in Kuwait the SUKUK was expected and become an important financial product. The concept of SUKUK product depends on the formation of the fund in their direct relation to an individual asset or a group of asset.
The suggestions are given to enhance the opportunities of domestic and to regulate the SUKUK secondary market in Kuwait. If secondary market is developed, Islamic bonds can be issued at higher price by the banks. The regulated SUKUK secondary market helps to prevent the sufficient flow of fund in Kuwait.
Another important recommendation for Kuwait individuals is to change their behavior towards the financial system and the banking industry.
The Islamic finance industry can change the laws in relation to business, economy and financial sectors of the Kuwait. The law should be passed to change the financial sectors of the Kuwait. The changes should take place in control of SUKUK as factor of strategic economic control. If Special Purpose Vehicle (SPV) is creating problem to implement the new designed model, they should be eliminated by the law of Islam. The special purpose vehicle is eliminated so as to adjust the trading structure of the law which regulates the parties in the trading process.
The trading structure should be started by self-regulating and enthusiastic organizations and trading structure in Kuwait is managed by Kuwait stock exchange. These types of changes should take place in control of strategic actions towards the logistic services given in the market and as per accounting standard of Kuwait. For national liquidity research and for development program there should be an independent centre for conducting this type of program. This type of centre is established to assess the liquidity and financial position of the Kuwait. Long term strategic plans should be developed to analyze the regional and international situation of the Kuwait. In addition to that, new structure of SUKUK should be implemented with Islamic Sharia.
There should be an establishment of research centers for Islamic finance studies. These centers should have a Sharia committee so that members are accepted by the majority of important people as per requirement in this sector. The establishment of such sectors will provide its services in Kuwait as well as in other foreign countries. These types of centers help in educating the financial expertise to find the new way when there is a fluctuation in the Kuwait’s financial market. The fluctuation in market arises due to fall in interest rates in the banking industry and decline in inflation rates of SUKUK products. To control these fluctuations of market financial expertise is required to maintain the balance of the fluctuating trends in the market.
The Kuwait government should organize some international events of SUKUK products such as conferences, seminars and forums. These types of international events help to generate new ideas on how to improve the financial position of the business. By organizing the international events, it shows some new path how to control the cash flow of the Islamic banking industry.
The growth of SUKUK market is affected due to western capital market techniques. Due to lack of capital market technique the performance of SUKUK market is hindered. The effect of inflation on an Islamic bond can be controlled with the help of the Islamic bond in the SUKUK market.
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