Factors affecting sukuk market development: empirical evidence from sukuk issuing economies

Abstract

Purpose Both developed and developing countries, Muslim and non-Muslim, have been showing keen interest in sukuk financing. This interest was because of the lesson learned by both Asian and non-Asian economies that having a developed capital market is very essential to enable an economy resilient to the financial crisis. Therefore, this study aims to produce theoretical relationships and identify empirical support for the determinants of sukuk market development. Design/methodology/approach By using panel data analysis, the study covers the period from 1993 until 2017, and includes 13 sukuk issuing economies as per the availability of data. Findings The findings of the study revealed that the stage of economic development, banking system, money supply and current account balance are positively associated with sukuk market. Interestingly, economic size and exports appear to be negatively associated with sukuk. Practical implications To flourish the domestic sukuk market, authorities need to strengthen the existing financial system and economic development. Originality/value The study contributes in a limited body of knowledge on determinants of sukuk market development by exploring novel determining factors of foreign capital inflows as well as macroeconomic and financial factors.

Fiscal policy and sukuk market development in OIC countries

“…However, existing empirical studies have not paid adequate attention to the role of fiscal policy in developing sukuk market. Rather, the authors controlled for some fiscal policy variables in analyzing sukuk market; moreover, they did not include all the fiscal policy variables as control (Aman et al , 2021; Khudari, 2017; Mohammadi et al , 2017). For example, Aman et al (2021) include government consumption expenditure as control variable and found that it has not significantly influenced sukuk market.…”

“…Therefore, OIC countries have to expand the sources of finance to mitigate this stringent fiscal position. In this connection, recent empirical studies (Aman et al , 2021; Basyariyah et al , 2021; Mitsaliyandito and Arundina, 2018; Smaoui and Khawaja, 2016; Smaoui, et al , 2017; Smaoui and Nechi, 2017; Suriani et al , 2018; Yildrim et al , 2020) have examined the factors facilitating sukuk market development to suggest ways of correcting fiscal, macroeconomic and financial imbalances. Also, Mawardi et al (2022) found that lack of support by the national government hampers regional development of sukuk issuance.…”

“…First, some empirical researches have suggested areas for further research in respect of sukuk market development. For example, Aman et al (2021) who combined both sovereign and corporate sukuk in analyzing sukuk market development suggested that future studies should separately examine the factors affecting the development of sovereign sukuk and corporate sukuk . Likewise, the study of Muharam et al (2019) is confined to two countries and covers corporate sukuk in measuring sukuk market development suggested that future research should increase the sample size and incorporate sovereign sukuk in analyzing sukuk market development.…”

Factors influencing the individual investors of Bangladesh to opt for investment in ṣukūk

“…Sukmana (2020) identified economic growth as a driving factor for high sales of retail ṣukūk in Indonesia. For the development of the local ṣukūk market, strengthening economic development is recommended (Aman et al. , 2022).…”

Analisis Korelasi Literasi Sukuk Dengan Minat Investor Muda Muslim Membeli Sukuk

“…2021)15 ,Aman et al (2021) 16 ,Muawanah et al (2021) 17 ,Hariyanto & Hijriani (2021) 18 ,Suharti (2021) 19 ,Aman et al (2021) 20 ,Azis et al (2021) 21 danViana et al (2022) 22 . Fokus kajian sebelumnya terkait dengan perkembangan sukuk dan faktor-faktor yang memengaruhi perkembangan sukuk.…”