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/ http://irep.iium.edu.my/74176/ http://irep.iium.edu.my/74176/7/74176%20Does%20doing%20good%20pay%20off.pdf

id	iium-74176
recordtype	eprints
spelling	iium-741762020-02-26T19:06:47Z 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
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
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/ http://irep.iium.edu.my/74176/ http://irep.iium.edu.my/74176/7/74176%20Does%20doing%20good%20pay%20off.pdf
first_indexed	2023-09-18T21:45:05Z
last_indexed	2023-09-18T21:45:05Z
_version_	1777413396497432576

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

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