Sale Of Debt Research Articles

Sukuk Türlerinin İkincil Piyasalarda İşlem Görebilmesi ve Borç Satışı Yasağına Göre Analizi

Faizsiz finans kuruluşlarının likidite yönetimlerinde önemli bir rol oynayan sukuk türlerinin ikincil piyasada işlem görebilme kabiliyeti bu kuruluşlar için hayati önem taşımaktadır. Sukuk sertifikalarının ikincil piyasalarda işlem görebilmesi için sukukun borca dayalı değil varlığa dayalı olarak ihraç edilmiş olması gerekir. İslami Finans Kuruluşları için Muhasebe ve Denetim Kurumu (AAOIFI), sukuk hakkında bir standart yayınlamış olup, bu standardın açıkça anlaşılması, sukuk ihraç eden ve likidite yönetiminde kullanan faizsiz finansal kurumlar için oldukça önemlidir. Bunun nedeni, borç satışının fıkhen yasak olması nedeniyle bu finansal kuruluşların bazı sukuk sertifikalarını ikincil piyasada alıp satmamaları ve likidite yönetiminde kullanmamaları gerekliliğidir. Makalenin yazılma amacı; çeşitli ülkelerin devlet kurumlarının ihraç ettikleri sukuk türlerini araştırarak, bu sukuk türlerinin AAOIFI sukuk standardına ve borç satışı (bay’al-dayn) yasağına göre ikincil piyasada alınıp satılmaya uygun olup olmadıklarını tespit etmektir. Makalede bu sukuk türlerinden bazılarının fıkhi açıdan ikincil piyasaya uygun olmadıkları halde likidite yönetimi amacıyla piyasaya sürüldükleri belirlenmiştir.

Impact of Domestic Institutional Investors on Foreign Institutional Investors in India: An Analysis

Foreign institutional investors (FIIs) play a vital role in the stock market of a country and Indian stock markets are no exception to this. FIIs bring liquidity, buoyancy and growth in stock markets but at the same time they also enhance the level of volatility and instability. Over past few years the stock markets in India have shown an impressive growth. The stock market indices are making new strides and increasing number of shares are making new highs. Following India’s impressive growth story, increasing corporate profitability and competitiveness, and better integration with the world economy, the investment by foreign institutional investors (FIIs) in the stock markets of India has gone up tremendously. Investment decisions of foreign institutional investors in India are affected by so many factors. Investment behavior of domestic institutional investors (DIIs) is one such important factor. This research paper is an attempt to analyze the impact of domestic institutional investors on the investment decision of foreign institutional investors in India. In other words, this study explores whether Domestic Institutional Investors affect the investment decisions of Foreign Institutional Investors in India or not. For this purpose, researchers have used regression analysis. Mutual fund investments have been taken as proxy for investment by DIIs. Investment patterns of FIIs and DIIs have been divided into eight variables i.e. FII Equity Purchases, FII Equity Sales, FII Debt Purchases, FII Debt Sales, MF Equity Purchases, MF Equity Sales, MF Debt Purchases and MF Debt Sales respectively. The study reveals that investment decisions of DIIs affect the investment decisions of FIIs.

Critical Review on Issues and Challenges of Malaysian Islamic financial system

This paper seeks to analyze the issues of the Islamic financial system and its challenges in Malaysia. This research adopts a qualitative approach based on data collected from articles, books, and online sources. A thematic approach has been utilized for data analysis. This study finds that Islamic banks impose both taʿwīḍ (compensation) and gharāmah (penalty) if the customer procrastinates or delays the payment of installments to the banks. That could lead to ribā (interest) in the contract. Therefore, the study suggests that the Islamic banks need to form a tabarruʿ (donation) fund. In addition, the study reveals that the Islamic banks are trending towards debt-based financing, which contradicts the maqāṣid al-sharīʿah. To fulfill the objective of the Sharīʿah, Islamic banks should apply more profit-sharing-based financing products. Another challenge in Islamic capital markets is baiʿ al-dayn (sale of debt) in Sukuk (Islamic bond), leading to ribā. Thus, the research proposes improving the transaction with a concept that does not lead to controversy. In family takaful, there are Sharīʿah issues related to the nominee and distribution of surplus. The study suggests that the nominee should work as an executor. Moreover, takaful companies can receive a portion of surplus based only on the muḍārabah model. Finally, this research identifies challenges in Islamic finance about human capital, misconceptions of Islamic finance, standardization, and harmonization, and proposes solutions accordingly. The research will assist the Islamic financial industry in finding ways to overcome the current issues and challenges.

Modern Application of Bai` al-Sarf (Currency Exchange) From Maqasid Al-Shari’ah Perspective: A Scoping Review

Bai’ al-sarf widely known as currency exchange is an important sale contract both in classical and contemporary world. This scoping review looks into the objectives behind the rulings set by the Shari’ah for this sale contract. These objectives are sorted out from the commentaries of the hadith and the deliberations of the jurists through textual analysis method. Some of the modern applications such as T+2 and Islamic Foreign Currency Exchange (FX) Swap structures are briefly juxtaposed against the objectives of bai’ al-sarf we discovered. Objectives of Shari’ah rulings in spot exchange is to avoid falling into the sale of debt against debt (al-kali bi al-kali), prevention of payment delay by one of the counter parties, prevention of conflict between the counter parties, and last not least to avoid falling into exchange contracts that will induce riba. Keywords: Bai’ al-sarf, currency exchange, spot seizing (al-taqabud fi al-majlis), equal counter-values (al-tamathul), sad bab al-niza’ (closing the door of conflict), riba.

Resolving intergenerational conflict over the environment under the Pareto criterion

Climate change policies create intergenerational winners and losers because the costs come first and the benefits later. In such cases, Kaldor-Hicks cost-benefit analysis seeks potential Pareto-improvements by showing the hypothetical potential for the winners to compensate the losers via lump-sum transfers. In their absence, once a costly climate policy is actually implemented, it unleashes distortions and general-equilibrium effects rendering unclear whether Kaldor-Hicks potential improvements lead to actual improvements. We study policies which, once implemented, would pass the Pareto test that no generation subsequent to policy action be made worse off than before. We develop a stylized climate-economy model in which production by the current generation generates pollution which “damages” production for future generations. Over time, the business-as-usual (BAU) economy gets increasingly polluted, consumption falls, and generational welfare levels decline. A government introduces costly pollution abatement and finances it via distorting taxes and the sale of debt (“green bonds”). Pollution levels start to decline, generating downstream welfare gains which may be taxed – without hurting anyone, in a Pareto sense – to help finance the policy and pay off the debt. Along the transition, every generation faces less pollution, consumes more and is happier than if life had continued in the BAU world.

Debt Theories in Islamic Commercial Transactions and Their Implications for the Islamic Capital Market

There are two different approaches to the prophetic concern regarding debt acquisition and the related rulings. The Prophet (peace be upon him) was recorded as having discouraged debt while other verbal traditions provided guidelines on how to manage debt in a socially responsible manner. This paper aims to analyse these two contrary views according to the Maqasid Shariah and look at how this has impacted juristic rulings. Furthermore, the paper reviews classical fiqh theories on debt, sale of debt, al-Muqassah, Suftajah, Hawalah, and Ibra. The paper also reviews the theoretical perspective on the sale of debt according to the understanding of Islamic scholars across the schools of Islamic Jurisprudence which has a substantial impact on the contemporary practices in Islamic banking and the Islamic capital market.

Institutional formation of the market for debt settlement of consumers of financial services of credit institutions in Ukraine

Purpose. The aim of the article is substantiation of the content of institutional measures, the implementation of which will improve the quality of assets of credit institutions of Ukraine. Methodology of research. The methodological basis of the research is formed on the basis of an institutional approach to substantiate the institutional preconditions for the functioning of the market for debt settlement of consumers of financial services of credit institutions; systematization to identify constraints and incentives for the effective use of various ways to solve the problem of non-performing bank loans; a statistical and analytical approach to quantify the level of quality of the current state of settlement of problem debt by different groups of banks in Ukraine; methods of scientific abstraction and logical generalization to describe the organizational and economic features of the formation of the market for debt settlement of consumers of financial services of different types of credit institutions of Ukraine. Findings. It is substantiated that ensuring the financial stability of credit institutions of Ukraine requires the development of a transparent market for debt settlement of consumers of financial services of credit institutions. The organizational-economic and institutional peculiarities of the formation of such a market are determined by detailing the following parameters: the legal basis of the activity of market participants; organizational form and institutional subordination of the debt management entities; administrative barriers to entry; the competitive conditions of activity of the entities for debt management and regulation of their relations with related parties; requirements for the personnel of debt management entities; the content of instruments to reduce the risks of their activities and to stimulate an increase in the volume of debt settlement of consumers of financial services of credit institutions; ways to organize debt sales; fiscal stimulus. It is proved that the most appropriate way to settle non-performing loans of state-owned banks is to involve the Deposit Guarantee Fund in this activity. This is explained by: the existence of an established mechanism for settlement of non-performing assets of liquidated banks; a well-functioning non-performing credit infrastructure that operates on the basis of transparency, uniformity of rules and public accountability; long experience of selling non-performing bank loans, including loans to related parties and corporate loans with poor quality or lack of collateral; a mechanism for independent economic investigations has been established; highly qualified specialists; no additional taxpayer spending. Originality. The institutional framework for the development of the debt management market for consumers of financial institutions of credit institutions has been improved, which, unlike the existing one, includes: substantiation of the organizational and legal framework of the activity of the debt management entity; identifying instruments for harmonizing the process of debt management from a wide range of stakeholders; disclosure of institutional and organizational features and institutional prerequisites for effective resolution of problematic debt of state-owned banks. This will help to improve the quality of consumer protection and their confidence in the monetary intermediation institution; will encourage credit institutions to improve the valuation of the market value of financial assets, including by enhancing liaison with credit bureaus. Practical value. The main provisions and conclusions of the conducted study are brought to the level of practical recommendations, take into account the current legislation and its prospective changes, and can be effectively used to solve the problems related to debt management of consumers of financial services of credit institutions in the domestic credit segment of the financial sector. Key words: credit institutions; state banks; non-performing loans; debt settlement market; debt settlement companies; institutional interaction of the entities of the debt settlement market; financial stability.

Legislative support of the resumption of lending

The article is dedicated to the research of legal support of the resumption of lending. Based on a conducted systematic analysis of current legislation and special sources, it is argued that the presence of a significant amount in banks is a significant obstacle to the development and reduction of cost of lending in Ukraine are the presence of a significant amount of non-performing loans from banks that are caused by low solvency of the population, a high level of real (effective) interest rates on loans, a high credit risk, numerous conflicts of legislation, certain provisions of the tax legislation. The article emphasizes that the existence of problem loans requires banks to create significant reserves for their coverage, limiting the amount of funds directed to lending, and significantly increases the bank's credit risk (CR). The article contains such ways of settling non-performing loans as restructuring of problem debts and/or partial forgiveness (write-off) of the debt, sale of debt with a discount (below their nominal value), foreclosure collateral (including mortgage), appeal to court with claims for debt collection under loan agreements, initiation of bankruptcy of the debtor, etc. The author considers the main directions of activity on the resumption of lending and acts of active and promising legislation aimed at settlement of debts. Author has been analyzed such acts of Parliament as the law on financial restructuring, which is conducted without court trial through negotiations between the debtor and creditors on the restructuring of monetary obligations to them, the law on the creation and maintenance of the Credit Register, which will help to avoid issuing loans to people with a negative credit history in the future, the law on the resumption of lending which aimed at protecting the interests of the banking sector (creditors) from unconscientious borrowers, as a result of what most of the common loopholes for unscrupulous borrowers can be closed Also considered bills on settling arreas and debt management, the adoption of which will significantly reduce the level of the problem debt.

Managing Reductions in Aid Inflows: Assessing Policy Choices in Haiti

A low-income country such as Haiti that confronts an environment of diminishing aid inflows must assess tradeoffs among the available policy options: spending cuts, monetization, sales of debt, or use of foreign reserves. To provide the analytical tools for this task, the paper draws from a set of DSGE models recently developed to evaluate policy choices in low-income countries for which external aid flows represent an important revenue source. Two simplified stylized variations of the main model are used to gain intuition and initially assess the trdeaoffs. Subsequenctly a full-scale small open economy DSGE model, calibrated to match conditions in Haiti and in similar low-income countries, is employed. Several key results are common to all model versions. While sales of foreign exchange reserves can compensate for the loss of aid inflows, this strategy is not sustainable. The remaining policy choices entail larger welfare costs, involving lower consumption levels and real depreciation. The results suggest that a mixture of spending cuts and depreciation is the best strategy, when use of foreign reserves is constrained.

Managing Reductions in Aid Inflows: Assessing Policy Choices in Haiti

A low-income country such as Haiti that confronts an environment of diminishing aidinflows must assess tradeoffs among the available policy options: spending cuts,monetization, sales of debt, or use of foreign reserves. To provide the analytical tools forthis task, the paper draws from a set of DSGE models recently developed to evaluatepolicy choices in low-income countries for which external aid flows represent animportant revenue source. Two simplified stylized variations of the main model are usedto gain intuition and initially assess the trdeaoffs. Subsequenctly a full-scale small openeconomy DSGE model, calibrated to match conditions in Haiti and in similar low-incomecountries, is employed. Several key results are common to all model versions. While salesof foreign exchange reserves can compensate for the loss of aid inflows, this strategy isnot sustainable. The remaining policy choices entail larger welfare costs, involving lowerconsumption levels and real depreciation. The results suggest that a mixture of spendingcuts and depreciation is the best strategy, when use of foreign reserves is constrained.

Debt maturity and the liquidity of secondary debt markets

We model the debt maturity choice of firms in the presence of fixed issuance costs in the primary market and search frictions in the secondary market for debt. In the secondary market, short maturities improve the bargaining position of sellers, which reduces the required issuance yield. Long maturities reduce reissuance costs. The optimally chosen maturity trades off both considerations. Equilibrium exhibits inefficiently short maturity choices. An individual firm does not internalize that a longer maturity increases expected gains from trade in the secondary market, which attracts more buyers and, hence, facilitates the sale of debt issued by other firms.

Debt Maturity and the Liquidity of Secondary Debt Markets

We develop an equilibrium model of debt maturity choice of firms, in the presence of fixed issuance costs in primary debt markets, and an illiquid over-the-counter secondary debt market with search frictions. Liquidity in this market is related to the ratio of buyers to sellers, which is determined in equilibrium via the free entry of buyers. Short maturities improve the bargaining position of debt holders who sell in the secondary market and hence reduce the interest rate that firms need to offer on debt. Long maturities reduce re-issuance costs. The optimally chosen maturity trades off both considerations. Firms individually do not internalize that choosing a longer maturity increases the expected gains from trade in the secondary market, which attracts more buyers, and hence also facilitates the sale of debt issued by other firms. As a result, the laissez-faire equilibrium exhibits inefficiently short maturity choices.

Do Sukuk (Islamic Bonds) Have a Role in Today’s Global Capital Markets?

Both conventional bonds and sukuk attempt to mobilize funds from entities with surplus funds to those with shortages, in line with the objectives of a financial system. But there are structural and risk–return differences between the two. In conventional bonds, the contract is based on the sale of debt. With sukuk, the performance of the contract is closely linked to an asset or a project in which the rewards and risks are shared. The two financing alternatives are clearly different. Conventional bonds are based on debt instruments (IOUs), whereas sukuk financing is based on equity-like arrangements. Conventional bond issuers can mitigate financial risk by issuing sukuk that do not introduce the possibility of bankruptcy in case of financial difficulty or default. Sukuk investors can benefit from a collateralized, maturity-specific, limited-risk, equity-like claim. Sukuk issues are available to governments, financial institutions, and investors regardless of their religious background, beliefs, and faiths. The use of sukuk along with conventional bonds offers additional opportunity for bond issuers of all kinds around the world. <b>TOPICS:</b>Fixed income and structured finance, legal/regulatory/public policy, ESG investing, emerging

Debt Maturity and the Liquidity of Secondary Debt Markets

We develop an equilibrium model of debt maturity choice of firms, in the presence of fixed issuance costs in primary debt markets, and an illiquid over-the-counter secondary debt market with search frictions. Liquidity in this market is related to the ratio of buyers to sellers, which is determined in equilibrium via the free entry of buyers. Short maturities improve the bargaining position of debt holders who sell in the secondary market and hence reduce the interest rate that firms need to offer on debt. Long maturities reduce re-issuance costs. The optimally chosen maturity trades off both considerations. Firms individually do not internalize that choosing a longer maturity increases the expected gains from trade in the secondary market, which attracts more buyers, and hence also facilitates the sale of debt issued by other firms. As a result, the laissez-faire equilibrium exhibits inefficiently short maturity choices.

Global financial crisis: an Islamic finance perspective

PurposeThe purpose of this paper is to initially contribute the literature linking the global financial crisis and the Islamic finance model which is competent of playing down the severity and frequency of financial crises, by introducing the financial system based on sharing in the risk. It links credit expansion to the growth of the real economy by allowing credit primarily for the purchase of real goods and services which the seller owns and possesses, and the buyer wishes to take delivery. It also requires the creditor to bear the risk of default by prohibiting the sale of debt, thereby ensuring that he evaluates the risk more carefully. It is important for everyone's future that we study the current crisis in order to develop sustainable financial practices and in quest of a new business model based on sharing the profit and loss.Design/methodology/approachThe divergence approach is used for exploring possibilities and constraints of inherited situations by applying critical thinking and analysis through the published literature in Islamic finance. This is to create new understandings of international finance and using new banking business model towards better design solutions for the current global financial crisis and preventing more collapse in the future.FindingsA new business model for the banking system based on non‐interest‐based transactions but profit and loss sharing should be in practice at the financial system. The financial institutions should encourage business and trade activities that generate fair and legitimate profit. In Islamic finance, there is always a close link between financial flow and productivity. This intrinsic property of Islamic finance contributes towards insulating it from the potential risks resulting from excess leverage and speculative financial activities which are part of the root causes of the current financial crisis.Research limitations/implicationsThis paper is based on published research papers but does not include empirical investigation.Practical implicationsThe new business model based on Islamic finance principles will help in financing businesses by using alternative methods to the banking systems or as a different way to run our banking system. The Islamic finance system with proper checks and controls introduces greater discipline into the economy and links credit expansion to the growth of the real economy.Originality/valueThe paper sheds new light on the relationship between the Islamic finance model and a new business model for the financial institutions to be used in order to think through how to prevent future financial collapses and make capital markets work more effectively.

The Global Financial Crisis: Can Islamic Finance Help Minimise the Severity and Frequency of Such a Crisis in Future

The article tries to determine the primary cause or causes of the financial crises that have plagued almost every country around the world over the last three decades. Of particular significance are the 1998 Long-Term Capital Management (LTCM) breakdown and the prevailing subprime mortgage crisis in the United States which is more severe than any in the past and has had devastating spill-over effects worldwide. It argues that one of the major causes of these crises is the lack of adequate market discipline in the financial system. This leads to excessive lending, high leverage and, ultimately, the crisis. Unwinding gives rise to a vicious cycle of selling that feeds on itself and leads to a steep decline in asset prices accompanied by bank failures and economic slowdown. Risk-sharing along with the availability of credit for primarily the purchase of real goods and services and restrictions on the sale of debt, short sales, excessive uncertainty (gharar), and gambling (qimar), which Islamic finance stands for, can help inject greater discipline into the system and, thereby, substantially reduce financial instability.

SEC shortens Rule 144 holding periods and loosens restrictions on resales of privately placed securities

PurposeThe purpose of this paper is to describe recent amendments to Rule 144 of the Securities Act of 1933 concerning holding periods and resale of privately placed securities.Design/methodology/approachThe paper describes key changes with respect to shortened holding periods, elimination of most requirements for non‐affiliates, and relaxation of requirements for sale of debt securities.FindingsThe paper finds that the SEC has adopted significant amendments to Rule 144 that will increase the liquidity of privately placed securities and ease the burden on issuers caused by having to grant burdensome registration rights. The amendments shorten the holding periods before affiliates and non‐affiliates may sell restricted securities and otherwise loosen restrictions on the public resale of equity and debt securities acquired in private placements.Originality/valueThe paper is a useful guide to rule changes written by experienced securities lawyers.

Bank of America Corp.

AbstractCommercial Banking (MIC: 8.1 SIC: 6021 NAIC: 522110)Bank of America, with $1.292 trillion in total assets as of Dec 31 2005, is a bank holding and financial holding company. Co.'s Global Consumer and Small Business Banking segment provides a range of products and services to individuals and small businesses. Global Business and Financial Services primarily provides commercial lending and treasury management services to middle‐market companies. Global Capital Markets and Investment Banking provides capital‐raising services, advisory services, derivatives capabilities, equity and debt sales and trading. Global Wealth and Investment Management offers services to institutional clients, high net‐worth individuals and retail customers.

Qira`at fi Syar'iyyah al-Tatbiqat al-Mu'asarah li Buyu' al-Dayn

Debt is a wealth obligation upon another person as a result of a contract of exchange, a loan or damages made on the other`s wealth. It is also normally related to wealth that is associated with interest or riba which has its own specific governing rules. Both of these features of debt has attracted persistent emphasis among the Muslim jurists in explaining the law of debts including its sale. In fact, the illegality of sale of debt and its vast implications upon monetary transactions has made it as one of the most frequently discussed subject among the jurists who have put an emphasis on the laws govering the sale of debts to prevent people from an indulgement in riba. Unfortunately, there are some Islamic financial institutions which has freely adopted it and have developed many financial products that contains features of this non-permitted sale. The applications were justified by the view of some jurists who has allowed it, the detachment between debts, and modern adaptation of the sale of debt. This article attempts to discuss the harmlessness of these justifications and see whether they authorize the usage of sale of debt in the modern Islamic financial institutions or better for them to abandon it in order to maintain their Islamicity.

Bank of America Corp.

AbstractCommercial Banking (MIC: 8.1 SIC: 6021 NAIC: 522110)Bank of America, with $1.110 trillion in total assets as of Dec 31 2004, is a bank holding and financial holding company. Co.'s Global Consumer and Small Business Banking segment provides range of products and services to individuals and small businesses. Global Business and Financial Services primarily provides commercial lending and treasury management services to middle‐market companies. Global Capital Markets and Investment Banking provides capital‐raising services, advisory services, derivatives capabilities, equity and debt sales and trading. Global Wealth and Investment Management offers an array of services to institutional clients, high‐net‐worth individuals and retail customers.