A Comparative Study of Islamic Fiscal Instrument Securitization from History to the Modern Age

Abstract

In the heyday of Islam, esham attested as a fiscal instrument to raise funds from the public. The Ottoman Empire developed esham for facing a crisis after the war defeat. Esham became the milestone for the presence of the world's first Islamic securitization. In Islamic modern ages, sukuk grows as one of the blooming Islamic financial instruments globally and has become a new investment alternative that promises a return that is safe, competitive, and sharia compliant. Historians mentioned that esham is actually the origin of sukuk. The sukuk that is known today is actually a form of modern esham and cash waqf. In Indonesia, cash waqf that is placed on a sukuk becomes a new fiscal instrument. Through cash waqf-linked sukuk (CWLS), the public can contribute to national development as well as do waqf for social projects, and the fund will be returned at the maturity date. Overall, this chapter provides an overview of these three Islamic fiscal instrument securitizations as alternative sustainable financing to face the challenges in public economics in the globalization era.