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This is different however from the concept of ‘profit-sharing’ which will be explained next.
Despite of the differences between sukuk and conventional bond, Balkish, Azwan and Rabiatul (2012) stated that, both financial instruments have fixed term maturity, bear profit (coupon) and tradable at normal yield price.
However, sukuk must be related and attached to specific asset, service, or project for a certain time period.
1.2 Problem Statement According to Dodik (n.d), there is only 20 total of results from Proquest searching of sukuk.
Today, the increasing popularity of Islamic finance and banking product around the world, especially the issuance of sukuk, a great number of research has been attempted to investigate difference, application, and performance as related to sukuk.
Commonly, sukuk is known as ‘Islamic bonds’, but the correct translation of the Arabic word of Sukukis, ‘islamic Investment Certificates’ (Tahmoures, 2013).
The term ‘Islamic bond’ is being pointed out as the only difference between sukuk and conventional bond is that the regulation consistent with Islamic principle of financial trading apply to sukuk (Arif and Meysam, 2012).
PRINCIPLES OF ISLAMIC BANKING The Islamic banking system follows certain, yet simple, rules set by the Qur’an and the Shari’ah (Islamic law), which if deviated from the system becomes un-Islamic. Any predetermined payment or benefit over and above the actual amount of principal is prohibited: Islam allows only the type of loan in which interest of any form is not charged.
Interest in this case is in either monetary form or other beneficiary forms such as using the borrower’s property, etc. In other words, any type of benefit received by the lender from the borrower in return for lending the money is prohibited.