Does sukuk market development spur economic growth?

Smaoui, Houcem; Nechi, Salem

doi:10.1016/j.ribaf.2017.04.018

Cited by 80 publications

(90 citation statements)

References 28 publications

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“…Research on the sukuk market that was carried out by Said and Grassa (2013) conveyed that economic growth has a positive influence on the development of the sukuk market. On another side, research done by Smaoui and Nechi (2017) revealed that economic growth has a positive influence towards sukuk market development.…”

Section: Finance-growth Nexus Theorymentioning

confidence: 99%

Islamic stock market and sukuk market development, economic growth, and trade openness (the case of Indonesia and Malaysia)

Muharam

Anwar

Robiyanto

2019

BTP

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This study was conducted in order to analyse the two-way relationship between the Islamic stock market and sukuk market development, and economic growth. this study also analyses whether trade openness influences the development of the Islamic stock market and sukuk market, and economic growth. VAR (Vector Auto Regressive), VECM (Vector Error Correction Model), and a Granger Causality Test used to test the hypothesis. Using Indonesia and Malaysia as the sample countries and from February 2008 to December 2017 period, the results showed that there is a bi-directional causality between the development of the Islamic stock market and the development of the sukuk market in Indonesia and Malaysia. There is a bi-directional causality between the development of the Islamic stock market and sukuk market with economic growth in Indonesia. Unidirectional causality is found between economic growth and the sukuk market development in Malaysia. And no causality (neutrality) is reported between the development of the Islamic stock market and economic growth in Malaysia. Meanwhile, trade openness has a significant and positive effect on the sukuk market development as well as economic growth in Malaysia. For the limitations, this research only focused on two countries and only delved into the corporation sukuk market.

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Section: Finance-growth Nexus Theorymentioning

confidence: 99%

Islamic stock market and sukuk market development, economic growth, and trade openness (the case of Indonesia and Malaysia)

Muharam

Anwar

Robiyanto

2019

BTP

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“…Our focal variable in this paper is the degree of Sukuk market development (smd). We measure smd with the ratio of Sukuk market capitalization as a share of GDP (Smaoui and Nechi 2017;Smaoui, Mimouni, and Temimi 2017). We argue that smd may have an ambiguous effect on bank insolvency risk.…”

Section: The Control Variablesmentioning

confidence: 99%

“…Although the global Sukuk market has been growing rapidly, the literature on Sukuk has evolved at a slower pace. The existing studies cover several issues including firm-specific determinants of Sukuk (Azmat, Skully, and Brown 2014;Hanifa, Masih, and Bacha 2015); country-level determinants (Smaoui and Khawaja 2017); the relationship between Sukuk and economic development (Smaoui and Nechi 2017); the effect of Sukuk on the stock market (Ashhari, Chun, and Nassir 2009;Alam, Hassan, and Haque 2013;Godlewski, Turk-Ariss, and Weill 2013;Hassan et al 2017); Sukuk structures and risks (Tarik and Dar 2007); and Sukuk versus conventional bonds (Cakir and Raei 2007).…”

Section: Introductionmentioning

confidence: 99%

The impact of Sukuk on the insolvency risk of conventional and Islamic banks

2019

Self Cite

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This paper investigates the impact of Sukuk market development on bank insolvency risk using a sample comprising 72 Islamic banks (IBs) and 145 conventional banks (CBs) spanning 15 countries over the 2003-2014 period. We measure bank insolvency risk using the z-score. Using the system-GMM estimator, we find that Sukuk market development adversely affects the insolvency risk of IBs, while that of the CBs remains unchanged. Moreover, our results point to a negative and significant effect of the size on the insolvency risk of both CBs and IBs, thus confirming the well-documented Too-Big-To-Fail hypothesis. This effect is more pronounced for IBs indicating that large IBs exhibit higher insolvency risk than their conventional counterparts. Finally, we show that the 2008 global financial crisis has exacerbated the negative effect of Sukuk market development on bank insolvency risk, as expected.

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“…In last decade, the Islamic fi nancial services industry has witnessed an unprecedented growth to become part of the global fi nancial system, reaching USD1.88 trillion by the end of 2015 (Islamic Financial Services Industry Report 2016). According to Smaoui and Nechi (2017), many recent studies have argued that the industry of the Islamic fi nance exhibited a better performance, less risks and more stability than its conventional counterpart during the recent global fi nancial crisis of 2008. Much of this expansion has been affected by the extensive issuance of sukuk, that are investment certificates which comply with Islamic law, as an alternative to the issuance of fi xed income securities or interest-based bonds.…”

Section: Introductionmentioning

confidence: 99%

“…The sukuk market, as fi nancial intermediaries, plays positive important roles in the country's economic growth by stimulating the capital accumulation and promoting the effi cient allocation of resources (Smaoui & Nechi 2017;Ben Jedidia Khoutem 2014;Kusuma & Silva 2014). In this regard, the sukuk markets make fi nancing available to long-term debtors by mobilizing the savings, thereby contributing to the effi cient functioning of the capital FIGURE 1.…”

Section: Introductionmentioning

confidence: 99%

The Infuence of Macroeconomics Factors and Political Risk on the Sukuk Market Development in Selected GCC Countries: A Panel Data Analysis

2019

JEM

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In light of the countries' attempt to develop their economies and follow stable macroeconomic policies that stimulate the sukuk markets and the stress placed on the political stability of the countries, investigating the role of political risk and macroeconomic factors is crucial to sustain a country's Islamic financial development. Therefore, this study used the panel data to examine the influence of the macroeconomic factors and political risk on the sukuk market development in the selected GCC countries, namely Saudi Arabia, United Arab Emirate, Bahrain, Qatar and Kuwait from 2001 to 2016. The model of sukuk market development is extended by incorporating the six specific characteristics of GCC countries. The diagnostic tests affirm that the most preferred model to explain the determinants of sukuk market development is by using the Pooled Ordinary Least Square (POLS) Model. The findings reveal that the banking sector and exchange rates are negative and have significant effects on the sukuk market development. The consideration of the increasing level of trade openness is vital due to its major contribution to enhance the sukuk market development. Interestingly, this study finds a positive significant association between the political risk and the sukuk market development. In order to promote the sukuk market development in the region, it is important to develop strategies for integrating and linking the banking sector and the sukuk market in order to promote the sukuk market by creating a scale economy and the required financial market infrastructure.

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Does sukuk market development spur economic growth?

Cited by 80 publications

References 28 publications

Islamic stock market and sukuk market development, economic growth, and trade openness (the case of Indonesia and Malaysia)

Islamic stock market and sukuk market development, economic growth, and trade openness (the case of Indonesia and Malaysia)

The impact of Sukuk on the insolvency risk of conventional and Islamic banks

The Infuence of Macroeconomics Factors and Political Risk on the Sukuk Market Development in Selected GCC Countries: A Panel Data Analysis

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