Sukuk development in European countries: a comprehensive assessment on existing issues and challenges

Purpose This paper aims to unveil the issue and challenges of Sukuk development in Europe, examining its opportunities as the phenomenon has primarily been driven by unfulfilled investor demand for products that better align with their religious beliefs. Since the Sukuk market makes up around 60% of total Islamic finance assets, the growth of this phenomenon requires proper research, especially for the emerging markets in the European jurisdiction. Design/methodology/approach The paper uses content analysis to derive the pedigree of Sukuk in Europe and to criticize the principal characteristic of Sukuk development in Europe and analyze how the Sukuk market is developed and what are the potential for Sukuk development in this region. Moreover, current research is based on analyzing previous studies. Findings The study has identified that the existing challenges are competition with conventional, standardization, human resources, Sukuk structuring techniques and their nature and application. Some opportunities and potential demands have been found, such as Muslim entities’ market demand, resource mobilization and linkages between financial institutions. Meanwhile, the current issues in the European Sukuk market are price, maturity, issuer and Sukuk structure. Research limitations/implications A country with diverse characteristics and legal jurisdictions has different challenges, markets and limitations concerning the application of Sukuk that might wreak fundamental issues. As a result, the application of Sukuk might vary accordingly. Practical implications The findings will reveal challenges and current issues that lie ahead in applying Sukuk in European countries. This needs to be taken promptly and seriously by each country with its characteristics and jurisdiction. Originality/value Despite its potential, Sukuk faces major issues and challenges in the European market that encompass regulatory barriers, market awareness issues, high cost, limited liquidity and competition from conventional bonds. Addressing these challenges requires regulatory reform and government support. This paper unveils all these research gaps as the novelty that entirely occurred in the European market based on previous studies and qualitative approaches.