Understanding Islamic Finance: Comparative Analysis on Advantages and Disadvantages between Sukuk and BondsUnderstanding Islamic Finance: Comparative Analysis on Advantages and Disadvantages between Sukuk and Bonds
Abstract: Islamic finance has been growing tremendously for the past years. On the other hand, the understanding of it, is still limited compared to the conventional finance. Claims that Islamic finance is more resistant to crisis compared to the conventional finance is analysed in this thesis through the comparison between Sukuk and bond financing. There are two aims of this thesis. The first aim is to study the advantages and disadvantages between Sukuk and conventional bonds. The second is to explore specific advantages and disadvantages of Sukuk during certain market conditions, such as financial crisis of 2008. This thesis found that even when Sukuk and conventional bonds have fundamental differences, they are exposed to the same risk and therefore have the same reaction to the market’s sentiments. Specifically during the financial crisis of 2008, other factors affected the performance of Sukuk price, such as the potential default of a prominent company and the fall of oil price.
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