Sukuk: An Islamic Financial Instrument

In recent years, using a new instrument - called Sukuk- has been increasingly taken into consideration in Islamic countries like Saudi Arabia, Pakistan, Kuwait, Malaysia, Bahrain, Qatar and even some European countries. Sukuk is a financial instrument backed by physical assets and balance sheet; Sukuk bonds can be used as a financing method for government agencies as well as private companies. Given the importance of the issue, this paper first discusses the history and defines Sukuk. The following types of Sukuk, structures and risk associated with these securities have been studied. The next sections explain the differences between Islamic bonds and conventional financial bonds and Sukuk world situation as well. Then, Sukuk accounting standards have been fully described and finally, conclusions and summarizes are presented.