Balancing Shariah Authenticity and Market Stability: A Scenario-Based Framework for Implementing AAOIFI Shariah Standard No. 62 in the Global Sukuk Market

Tasawar Nawaz ()
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Tasawar Nawaz: Department of Accounting & Finance, King Fahd University of Petroleum & Minerals, Dhahran 31261, Saudi Arabia

JRFM, 2025, vol. 18, issue 11, 1-20

Abstract: This work develops a scenario-based policy framework for the prospective implementation of AAOIFI Shariah Standard No. 62 in global sukuk markets. The analysis suggests that immediate, rigorous enforcement would advance Shariah authenticity yet risk near-term destabilisation: issuance could retrench, the pricing premia could widen, and the rating treatment could bifurcate or even become inapplicable for instruments with pronounced risk-sharing. By contrast, calibrated sequencing, targeted legal reforms to perfect title transfer, and harmonised supervisory guidance can mitigate fragmentation and sustain investor confidence while re-anchoring sukuk to their risk-sharing foundations. Taken together, aligning religious fidelity with market pragmatism is achievable: a measured adoption of Standard 62 can reinforce the ethical underpinnings of Islamic capital markets without compromising their capacity for resilient growth.

Keywords: sukuk; AAOIFI; Shariah Standard No. 62; Islamic finance regulation; Shariah governance; risk-sharing; asset-backed sukuk; policy trade-off; market stability; policy sequencing (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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