The islamic capital market essay
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Therefore, islamic finance is to be assets based as oppose to the currency based whereby investment structured on exchange or ownership of assets, and money is simply mechanism for transaction process As shown in Figure 1, it is clear that there is a great reduction of interest rate from The rising petrodollar flows in global markets imply continued and increasing petrodollar investments in the Islamic finance sector.
With the help of financial market, companies can raise money simply by issuing stocks or securities.
The risk is on the share of the lenders and others but not on the risk-return They are markets for long term funds with maturity period of more than one year.
Inthe interest rate was only 4.
Capital market pdf
Pricing methodology is not very different in Bonds and Sukuk. Financial assets are the claims on real assets. The expected profit rate or the Sukuk pricing shall be based on the average net profit of the relevant industry. The most critical factor for the illiquidity is the composition of assets of islamic bank which are dominated by trade-financing instrument. The term capital market is the market for securities and where companies and governments raise long-term funds, usually longer than a year. Comparing the two approaches has drawn several findings; it is found that the beta-risk is lower on investments, which are based on the partnership of Islamic financing as compared to the conventional market. These collapses have weakened and shaken the confidence of shareholders, debtors, governmental institutions, and other similar relevant stakeholders in corporate governance CG and the stock markets, and led to regulating many reforms and codes of best governance practices all over the world, to strengthen transparency and restore confidence in financial markets Barros et al. Therefore, when we benchmark Islamic financial instruments against the conventional rates, it is actually dealing with riba.
based on 31 review