Islamic Economics

Islamic Economics

Feasibility of Issuing Social Impact Securities Compatible with the Principles of Imami Jurisprudence in the Capital Market of the Islamic Republic of Iran

Document Type : Original Article

Authors
Mahdi Hallajan 1
Mohammad Tohidi 2
1 Master's degree student, Financial Management, Faculty of Islamic Studies and Management, Imam Sadegh University, Tehran, Iran
2 Associate Professor, Department of Financial Management, Faculty of Islamic Studies and Management, Imam Sadegh University, Tehran, Iran
10.22034/iec.2025.2042065.2796
Abstract
Social impact investing refers to investments aimed at generating positive social outcomes alongside financial returns. In Western financial systems, Social Impact Bonds (SIBs) are commonly used to finance such projects, where investor returns are contingent upon the achievement of predefined social goals. However, due to the interest-based nature of conventional bonds, such instruments are generally impermissible under Islamic law. Moreover, tying investor returns to the level of social impact achieved raises jurisprudential questions that must be examined from a Shariah perspective. This research investigates the financial and jurisprudential feasibility of issuing Islamic Social Impact Sukuk as a Shariah-compliant alternative to conventional SIBs in the Iranian capital market. Adopting a qualitative research approach, the study is categorized as applied in purpose and descriptive-survey in method. Following a comparative review of social impact investment experiences in Western and Islamic countries, a conceptual framework for Islamic social impact Sukuk is proposed. Subsequently, various scenarios for linking returns to project outcomes are identified and analyzed using a descriptive-analytical method. Expert opinions were collected via structured questionnaires, and the best scenario was selected using the TOPSIS decision-making method. In the final phase, the Shariah compatibility of linking Sukuk returns to performance metrics was evaluated through expert interviews and focus group discussions. The findings confirm the feasibility of designing social impact Sukuk structures that comply with Islamic jurisprudential principles.
Keywords
Islamic Financial Instruments (Sukuk)
Social Impact Investing
Social Impact Bonds
Social Impact
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