Sukuk Issuance in the Emerging Markets A Relative Evaluation

Abstract

The Sukuk market in Malaysia runs parallel with the conventional bonds market and provides investors with investment options whereby the market trading is open to all. Indeed, Malaysia has proven itself as a center of choice for foreign corporations to issue Sukuk as well as to invest in these areas, as it offers one of the most diverse (in terms of types of securities, tenures, asset classes, structures, issuers and risk profiles), innovative and sophisticated array of investment choices in the global market. Thus, the objectives of this study are to investigate the significant mean different of amount Sukuk issue between Malaysia and across emerging market economies. The secondary data will be utilized to achieve the study objective for almost 10 countries that issue Sukuk from 2000 until 2015. The data then will be analyzed by using ANOVA or post Hoc test comparison as well as Levene’s test. The results prove that Malaysia is a leader in the Sukuk market in terms of largest Sukuk issuer and Sovereign Sukuk and there is a significant mean different between Sukuk issuance by Malaysia and other countries.

Fiscal policy and sukuk market development in OIC countries

“…The coefficient ( β = 0.037) shows that public debt contributes to sovereign sukuk issues by nearly 0.04%. This finding is in line with Mohammadi et al (2017) and Khudari (2017). Likewise, stock market has a very significant positive effect on sovereign sukuk market development across all the three models at 1% level of significance.…”

“…However, the study was based on descriptive analysis. Khudari (2017) found significant positive relationship between inflation rate and international sukuk . In the case of Al Parisi and Rusydiana (2016), the results of two-stage least square showed simultaneous relationship between budget deficit and sukuk issuance.…”

“…Mohammadi et al (2017) found that external debt issues and outstanding external public debt promote international sukuk issuance. Similarly, the findings of Khudari (2017) revealed that external debt positively explained corporate sukuk and sovereign sukuk , but it negatively affects international sukuk issuance in seven countries between 2011 and 2015. The study used partial least square analysis.…”

“…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.…”

Do Underlying Assets, Duration, Default Risk Level, Sukuk Liquidity, and Profitability Affect Sukuk Yield?

“…Further, aspects of trustworthiness in Sukuk following the failure of Sukuk in Gulf Corporation Council (GCC) countries, Malaysia, and Indonesia also slowed the development of Sukuk in Indonesia (Naifar & Mseddi, 2013;Khudari & Saad, 2019). During Sukuk default phenomenon in 2008, all asset-based Sukuk in Indonesia suffered a failure.…”