Roles and functions of special purpose vehicles (SPV): a comparison between Islamic and conventional finance / Mohammad Soleimani and S. Mustafa Shadab

Soleimani, Mohammad and Shadab, S. Mustafa (2020) Roles and functions of special purpose vehicles (SPV): a comparison between Islamic and conventional finance / Mohammad Soleimani and S. Mustafa Shadab. Journal of Emerging Economies & Islamic Research, 8 (1). pp. 1-11. ISSN 2289-2559

Abstract

The SPV (special purpose vehicle) is one of the key components of the securitization in both Islamic and conventional finance; however the details of how the transactions are implemented differ subject to the mode of securitization in Islamic and conventional finance. In conventional finance, the bank establishes a SPV and transfers its asset from its balance sheet to the SPV. The assets are used as the collateral for issuing securitized, debt-like instruments. Nevertheless, in Islamic finance mode of securitization, the SPV just services the cash flows for security holders and do participate in debt-issuance. This difference is originated from the risk-sharing principle in asset-based Islamic finance which contrasts with risk-transfer nature of an interest-based conventional finance and results in important differences in ownership right and valuation of SPVs in the two financial systems.

Metadata

Item Type: Article
Creators:
Creators
Email / ID Num.
Soleimani, Mohammad
UNSPECIFIED
Shadab, S. Mustafa
UNSPECIFIED
Subjects: H Social Sciences > HG Finance > Malaysia
H Social Sciences > HG Finance > Financial management. Business finance. Corporation finance
H Social Sciences > HJ Public Finance > Finance, Islamic
Divisions: Universiti Teknologi MARA, Selangor > Puncak Alam Campus > Faculty of Business and Management
Journal or Publication Title: Journal of Emerging Economies & Islamic Research
UiTM Journal Collections: UiTM Journal > Journal of Emerging Economies and Islamic Research (JEEIR)
ISSN: 2289-2559
Volume: 8
Number: 1
Page Range: pp. 1-11
Keywords: special purpose vehicle (SPV), risk-sharing, securitization, Islamic finance
Date: January 2020
URI: https://ir.uitm.edu.my/id/eprint/32086
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ID Number

32086

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