Disclosure of the Risks of Islamic Financial Instruments (Sukuk)

Omar Ikbal Tawfik and Hamada Elsaid Elmaasrawy Elsayed Ghazi

Chapter 8 in Islamic Accounting and Finance:A Handbook, 2023, pp 237-279 from World Scientific Publishing Co. Pte. Ltd.

Abstract: The study aims to propose a framework for disclosing sukuk risks, show the types of risks to which sukuks are exposed in the various literatures, and how to disclose sukuk risks in international standards such as IFRS, IFSB Standards, and AAOIFI Standards. The chapter deals with the disclosure of the risks of sukuk in the accounting standards divided among the following. First is in IFRS, which focused on the various risks to which conventional Islamic financial instruments are exposed in general, such as market risk, credit risk, liquidity risk, and other risks. Second is AAOIFI Standards that focus on the risks of Islamic financing formulas in general on the basis of which sukuk are issued. Third is IFSB Standards, which focused on the risks of non-compliance with Islamic law and legal risks to which sukuk are exposed. In addition, the chapter deals with a case study of Qatar Islamic Bank, an attempt to obtain field evidence about the level of banks’ disclosure of sukuk risks through the annual reports of the Bank. The researchers found that the disclosure of sukuk risks in Qatar Islamic Bank was very limited, as well as the focus on the disclosure of sukuk risks was on quantitative disclosure, while the descriptive disclosure of sukuk risks is very limited. The researchers proposed a framework for disclosing the risks of sukuk, which is divided into quantitative risks and descriptive risks.

Keywords: Islamic Accounting; Islamic Finance; Islamic Banking; AAOIFI (search for similar items in EconPapers)
JEL-codes: G34 M41 (search for similar items in EconPapers)
Date: 2023
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