Title: Conventional vs. Islamic debt-equity portfolio swaps

Authors: Issam Tlemsani

Addresses: The Center for International Business, 132, Malden Road, London KT3 6DR, UK

Abstract: This conceptual paper investigates debt-equity portfolio swaps as a solution to post-SARS-CoV-2 pandemic public and private debt. The emphasis in the paper is the need to be less reliant on a debt-based system. The findings indicate that the replications of a conventional portfolio into an Islamic portfolio are compatible with the regulatory standard, sharia boundaries, and professional practices developed from investment theory. Data was collected monthly from 2016 to 2021, and the result confirmed that the Islamic portfolios have a higher return and less risk than conventional portfolios. The implications of this research are to provide a road map to the regulators, policymakers, governments and the financial industry on how to rearrange some of the public and private debt. A likely remedy is the incorporation of Islamic financial instrument principles through the equitisation of public and private debt.

Keywords: portfolio replication; debt-equity swaps; Islamic portfolio; debt; equity system.

DOI: 10.1504/IJMFA.2022.120938

International Journal of Managerial and Financial Accounting, 2022 Vol.14 No.1, pp.20 - 34

Received: 19 Sep 2021
Accepted: 09 Oct 2021
Published online: 17 Feb 2022 *

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