Prospect of Sukuk in the Fixed Income Market: A Case Study on Kuwait Financial Market
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Authors
Bhuyan, Rafiqul
Issue Date
2015
Type
Journal Article
Peer-Reviewed
Peer-Reviewed
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Abstract
Regional Islamic capital market for fixed income securities has been growing steadily and noticeably as Sukuk has
been emerging as an alternative and important instrument to conventional debt instrument in the fixed income market.
Although the country has largest muslim population, Kuwait’s fixed income capital market is still dominated by
conventional debt instruments. Further, the central bank of Kuwait has been the major issuer of the conventional bond
and not an issuer of Sukuk. The small number of sukuk issues in Kuwait compared to bonds is due to lack of clear law
and regulation, shortage of expertise in structuring sukuk, and absence of government issued sukuk. Among the sukuk
issued in Kuwait, only one sukuk has defaulted and has gone through restructuring during the period of global financial
crisis when many financial institutions have failed around the world. This should be taken positively as a prospect of
sukuk as an alternative to bond as viable fixed income security. We believe that the role of central bank is key to the
prospect of flourishing Islamic financial instruments such as sukuk in Kuwait as well as in the global fixed income
markets.
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Volume
6
Issue
4