A Theoretical and Jurisprudential Study of Islamic Bonds (sukuk)

Islamic banks using the bonds existing in financial markets can manage more effectively their balance sheets. On the other hand, those who have a great amount of liquidity and acquire a little return, now can purchase tradable bonds to gain a real competitive profit rate comparable with what exists in the classic market. In addition, Islamic banks which use goods usury for liquidity management, can use the bonds to that end. Most bonds circulated until now have been purchased by major financial institutions such as Central Bank, Islamic banks, private sector, and other non- banking financial institutions. In fact, these institutions have appropriated their liquidity surplus to invest in bonds and most of them want to keep these bonds until their overdue. Therefore, these institutions do not need a secondary market to trade their bonds, but it is worth mentioning that individual investors may need a secondary market, because their approach is different from that of major financial institutions.