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Does doing good pay off? Social impact bonds and lessons for Islamic finance to serve the real economy

Purpose – The purpose of this paper is to examine the world’s first social impact bond (SIB) and the lessons that can be learned for the Islamic finance industry to fulfil its true objectives. Design/methodology/approach – The Peterborough SIB was recently announced to be successful in achieving...

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Main Authors: Syed Azman, Syed Marwan Mujahid, Haneef, Mohamed Aslam
Format: Article
Language:English
Published: Emerald Publishing 2019
Subjects:
HG3368 Islamic Banking and Finance
HJ1438 Public Finance In Islam
HN Social history and conditions. Social problems. Social reform
Online Access:http://irep.iium.edu.my/74176/7/74176%20Does%20doing%20good%20pay%20off.pdf
http://irep.iium.edu.my/74176/
https://www.emerald.com/insight/content/doi/10.1108/IES-05-2019-0001/full/pdf?title=does-doing-good-pay-off-social-impact-bonds-and-lessons-for-islamic-finance-to-serve-the-real-economy
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spelling my.iium.irep.741762021-11-17T04:43:13Z http://irep.iium.edu.my/74176/ Does doing good pay off? Social impact bonds and lessons for Islamic finance to serve the real economy Syed Azman, Syed Marwan Mujahid Haneef, Mohamed Aslam HG3368 Islamic Banking and Finance HJ1438 Public Finance In Islam HN Social history and conditions. Social problems. Social reform Purpose – The purpose of this paper is to examine the world’s first social impact bond (SIB) and the lessons that can be learned for the Islamic finance industry to fulfil its true objectives. Design/methodology/approach – The Peterborough SIB was recently announced to be successful in achieving its targeted social and investment outcomes, reducing recidivism by 9 per cent and paying back investors a 3 per cent pa return. The paper compares Peterborough SIB with socially responsible investment (SRI) sukuk in terms of form and substance, and finds that there are various lessons from the Peterborough SIB that can be useful for future development of Islamic financial products. Findings – Innovative social financial tools such as SIB exemplify the true spirit of risk sharing and social responsibility, which is arguably missing in current practices of the Islamic finance industry. With the growing interest towards SRI strategies and increase in socially motivated investors, such financial tools may not only help the sustainable growth of the Islamic finance industry, but also fill in the gap between its theory and practice. Practical implications – As such, the paper also proposes a social impact sukuk model which integrates the key aspects learned from Peterborough SIB. This includes prioritising social impact, measurable success indicators, data and management systems, flexible contracts, third sector integration, risk sharing and fostering the culture of innovation. Originality/value – The findings can offer some practical insights in dealing with the issue of Islamic finance practice being overly concerned with its formal adherence with Islamic legal rules whilst neglecting its true fundamental values. Emerald Publishing 2019 Article PeerReviewed application/pdf en http://irep.iium.edu.my/74176/7/74176%20Does%20doing%20good%20pay%20off.pdf Syed Azman, Syed Marwan Mujahid and Haneef, Mohamed Aslam (2019) Does doing good pay off? Social impact bonds and lessons for Islamic finance to serve the real economy. Islamic Economic Studies, 27 (1). pp. 23-37. ISSN 1319-1616 https://www.emerald.com/insight/content/doi/10.1108/IES-05-2019-0001/full/pdf?title=does-doing-good-pay-off-social-impact-bonds-and-lessons-for-islamic-finance-to-serve-the-real-economy DOI 10.1108/IES-05-2019-0001
institution Universiti Islam Antarabangsa Malaysia
building IIUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider International Islamic University Malaysia
content_source IIUM Repository (IREP)
url_provider http://irep.iium.edu.my/
language English
topic HG3368 Islamic Banking and Finance
HJ1438 Public Finance In Islam
HN Social history and conditions. Social problems. Social reform
spellingShingle HG3368 Islamic Banking and Finance
HJ1438 Public Finance In Islam
HN Social history and conditions. Social problems. Social reform
Syed Azman, Syed Marwan Mujahid
Haneef, Mohamed Aslam
Does doing good pay off? Social impact bonds and lessons for Islamic finance to serve the real economy
description Purpose – The purpose of this paper is to examine the world’s first social impact bond (SIB) and the lessons that can be learned for the Islamic finance industry to fulfil its true objectives. Design/methodology/approach – The Peterborough SIB was recently announced to be successful in achieving its targeted social and investment outcomes, reducing recidivism by 9 per cent and paying back investors a 3 per cent pa return. The paper compares Peterborough SIB with socially responsible investment (SRI) sukuk in terms of form and substance, and finds that there are various lessons from the Peterborough SIB that can be useful for future development of Islamic financial products. Findings – Innovative social financial tools such as SIB exemplify the true spirit of risk sharing and social responsibility, which is arguably missing in current practices of the Islamic finance industry. With the growing interest towards SRI strategies and increase in socially motivated investors, such financial tools may not only help the sustainable growth of the Islamic finance industry, but also fill in the gap between its theory and practice. Practical implications – As such, the paper also proposes a social impact sukuk model which integrates the key aspects learned from Peterborough SIB. This includes prioritising social impact, measurable success indicators, data and management systems, flexible contracts, third sector integration, risk sharing and fostering the culture of innovation. Originality/value – The findings can offer some practical insights in dealing with the issue of Islamic finance practice being overly concerned with its formal adherence with Islamic legal rules whilst neglecting its true fundamental values.
format Article
author Syed Azman, Syed Marwan Mujahid
Haneef, Mohamed Aslam
author_facet Syed Azman, Syed Marwan Mujahid
Haneef, Mohamed Aslam
author_sort Syed Azman, Syed Marwan Mujahid
title Does doing good pay off? Social impact bonds and lessons for Islamic finance to serve the real economy
title_short Does doing good pay off? Social impact bonds and lessons for Islamic finance to serve the real economy
title_full Does doing good pay off? Social impact bonds and lessons for Islamic finance to serve the real economy
title_fullStr Does doing good pay off? Social impact bonds and lessons for Islamic finance to serve the real economy
title_full_unstemmed Does doing good pay off? Social impact bonds and lessons for Islamic finance to serve the real economy
title_sort does doing good pay off? social impact bonds and lessons for islamic finance to serve the real economy
publisher Emerald Publishing
publishDate 2019
url http://irep.iium.edu.my/74176/7/74176%20Does%20doing%20good%20pay%20off.pdf
http://irep.iium.edu.my/74176/
https://www.emerald.com/insight/content/doi/10.1108/IES-05-2019-0001/full/pdf?title=does-doing-good-pay-off-social-impact-bonds-and-lessons-for-islamic-finance-to-serve-the-real-economy
_version_ 1717092989083320320
score 13.211869

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