The Islamic Development Bank Institute (IsDBI) (www.IsDBInstitute.org) and the Asian Development Bank Institute (ADBI) have jointly unveiled a pioneering study proposing the Ṣukūk Enhancement Fund (SEF), an innovative mechanism designed to improve the risk profile of ṣukūk and expand access to capital markets, particularly for small and medium-sized enterprises (SMEs).
The report was launched during the 20th IsDB Global Forum on Islamic Finance, held on 17 June 2026 in Baku, Azerbaijan, in conjunction with the 2026 IsDB Group Annual Meetings.
Titled “Ṣukūk Enhancement Fund: A Sustainable, Cost-Efficient Scheme for Enhancing the Risk Profile of Ṣukūk,” the study addresses one of the most persistent challenges in Islamic finance: enabling SMEs to access long-term financing through capital markets despite limited credit history, perceived risk, and high issuance costs.
The proposed SEF introduces a mutualized risk-sharing mechanism through which participating ṣukūk issuers collectively contribute to a protection fund that enhances investor confidence without relying on external guarantees, government subsidies, or additional financing costs. By transforming fragmented issuer risk into a pooled protection framework, the model seeks to broaden market participation while preserving economic discipline and Sharīʿah compliance.
Commenting on the study, Dr. Sami Al-Suwailem, Acting Director General of IsDB Institute, said: “The Ṣukūk Enhancement Fund represents a practical innovation that aligns with the core principles of Islamic finance—risk sharing, real-economy linkage, and inclusion. We believe it can help unlock new opportunities for SMEs and deepen Islamic capital markets.”
Prof. Bambang P. Brodjonegoro, Dean of the ADBI, added: “SMEs remain the backbone of many developing economies, yet access to long-term finance continues to be a challenge. The SEF offers a promising approach to expanding financing opportunities through market-based Islamic finance solutions.”
Supported by extensive quantitative analysis and Monte Carlo simulations, the study demonstrates the resilience of the proposed framework across a range of stress scenarios. The findings suggest that the SEF can enhance market stability, broaden the issuer base, and facilitate greater participation in the ṣukūk market.
Beyond its role as a risk-mitigation tool, the report positions the SEF as a foundational component of Islamic capital market infrastructure, capable of supporting financial inclusion, private sector development, and sustainable economic growth across IsDB member countries and beyond.
The report is accessible on IsDBI website here: https://apo-opa.co/3Q7QDlb
Distributed by APO Group on behalf of Islamic Development Bank Institute (IsDBI).
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About the IsDB Institute:
The Islamic Development Bank Institute (IsDBI) is the knowledge beacon of the Islamic Development Bank Group. Guided by the principles of Islamic economics and finance, the IsDB Institute leads the development of innovative knowledge-based solutions to support the sustainable economic advancement of IsDB Member Countries and various Muslim communities worldwide. The IsDB Institute enables economic development through pioneering research, human capital development, and knowledge creation, dissemination, and management. The Institute leads initiatives to enable Islamic finance ecosystems, ultimately helping Member Countries achieve their development objectives. More information about the IsDB Institute is available on www.IsDBInstitute.org
