Who issues <i>Sukuk</i> and when?: An analysis of the determinants of Islamic bond issuance

Nagano, Mamoru

doi:10.1016/j.rfe.2016.05.002

Cited by 40 publications

(42 citation statements)

References 46 publications

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“…Nagano 2016provides more insights into this matter. Nagano (2016) argues that information costs influence sukuk issuance. The author uses probit regression for the determinants of sukuk issuance choice.…”

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confidence: 99%

“…These statistics prove that issuance of sukuk is not confined to some specific type of firms, although smaller firms with less income are more likely to issue sukuk than conventional bonds. This is no surprise considering a finding of Nagano (2016) that firms face a low degree of financial constraint to issue sukuk, once they have accessibility to the sukuk market.…”

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confidence: 99%

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Nexus between risk sharing vs non-risk sharing financing and economic growth of Bangladesh

Chowdhury

Akbar²,

Shoyeb

2018

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and finally, Quoc Cuong Phan and Taha Bhatti for the excellent research assistance in managing some of the papers in this issue. 646 MF 44,6 regarding the effect of these two variables to risk exposure and efficacy of both Islamic and conventional banking systems. In order to add more value to current literature with reference to the differences between Islamic and conventional banking systems, Bougatef and Korbi aimed to study the factors that explain intermediation margins under both Islamic and conventional banks operating in the Middle East and North Africa. By using the dynamic panel modeling approach, they revealed different determinants of net profit margins under these two systems. Utilizing various methodologies including Markowitz's (1952) portfolio optimization, visual data representations and the classic Fama-Macbeth (1973) two-pass procedure regressions, Cheong investigated the ability of the Islamic Gold Dinar to hedge against foreign exchange market volatility. His findings documented a new hedging instrument to diversify investors' currency portfolios. In the later article, Chowdhury, Akbar and Mohammad examined the relationship between Islamic financing principles and economic growth in Bangladesh using auto regressive distributive lags. Having considered all annual reports of Islamic banks in Bangladesh, this group of authors shed light on how the economic growth responds to the risk sharing and non-risk sharing instruments. In the wake of the GFC, predicting financial distress in banking systems has been increasingly more critical in order to prevent future economic downturns. In their paper, Halteh and his co-authors; Kumar and Gepp aimed to forecast the failure by using cutting-edge stochastic models including decision trees, stochastic gradient boosting and random forests to study 101 international publicly listed Islamic banks. Their findings add value to the literature on the issue of Islamic banking and predicting financial distress. To examine the differences in investors' perceptions concerning the response to the issuance of Sukuk and conventional bonds, Hassan, Ahmed and Rayfield observed significantly negative abnormal returns before and after the announcement date of Sukuk issuance. By utilizing linear and logistic regression models, they found an interesting connection: first, between firms' characteristics and these abnormal returns; and second, issuers' preferences between issuing Sukuk and conventional bonds. Mahmood, Gan and Nguyen, by utilizing the two-step system GMM estimation technique on 55 full-fledged Islamic banks from 11 different countries, have analyzed various factors at both firm-specific and macroeconomic levels, in order to explore their impacts on maturity transformation risk. This paper makes an important contribution to studying maturity transformation risk which is considered one of the major causes of the global financial crisis. Md Zabri and Mohammed examined the acceptability of the Cash Waqf-financial cooperative-Musharakah Mutanaqisah (MM) home financing...

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Nexus between risk sharing vs non-risk sharing financing and economic growth of Bangladesh

Chowdhury

Akbar²,

Shoyeb

2018

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“…Investment Sukuk is defined by Accounting and Auditing Organization for Islamic Financial Institutions-AAOIFI Sharia standard 17(2) as "certificates of equal value representing undivided shares in ownership of tangible assets, usufruct, and services, or in the ownership of the assets of particular projects or special investment activity (AAOIFI, 2010)," which is similar to that of IFSB-2 (Islamic Financial Services Board, 2005). In essence, Sukuk is another means of mobilising funds to finance investment with an expected favourable yield to settle the future obligations, which allow it to access the capital market (Nagano, 2016). Dusuki (2012) classified Sukuk contracts into sales-based, lease-based, partnership/equity-based and agency-based.…”

Section: Islamic Sukukmentioning

confidence: 99%

“…The return and risk possibilities of the mixed portfolio depend on the preferred combinations of the form of the contract. In essence, Sukuk is another means of mobilising funds to finance investment with an expected favourable yield to settle the future obligations, which allow it to access the capital market (Nagano, 2016). Islamic bonds are structured in a way that conforms to Sharia guidelines and consists of the attributes of stocks and bonds (Klein & Weill, 2016).…”

Section: Islamic Sukukmentioning

confidence: 99%

A Review of Islamic Investment Literature

Hassan

Aliyu

Paltrinieri

et al. 2018

J of App Econs and Policy

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This paper reviews the empirical literature on the contemporary issues of Islamic investments and highlights the future research directions. The growing literature during the last several years and the penetration of Islamic investments beyond the Muslim majority countries motivate us to review the empirical studies in the area. We therefore focus our literature review on mutual funds, sukuk and equity investments, analysing 81 articles from the most important journals dealing with the topic. The mixed findings in this area help the understanding of professionals not familiar with Islamic investment to identify the trends of the literature for important decisions. Our results have also important financial implications for asset managers willing to include Islamic financial instruments into a well-diversified portfolio.

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“…The rationale of whether to issue a conventional bond versus a sukūk issuance, based on market receptivity and realities, contradicts much of the prevailing academic writings on who issues sukūk and when (Nagano, 2016). There is a chance that a sovereign sukūk issuance from the GCC may come to the market later, but probably in a more symbolic size.…”

Section: Thoughts On the Future Of The Hql Sukūk Marketsmentioning

confidence: 99%

High Quality Liquid Sukūk: Relevance, Practice, and Empirical Research in the Context of Rising Global Interest Rates

Karataş

2017

AEF

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Liquidity management has always been a major issue in Islamic banking. In the early years of the industry, a major problem was a general tendency toward excess liquidity. In the future, the main issue in the context of depressed oil prices, a rising global interest-rate environment, and a tightened regulatory landscape under Basel III is likely to be a relative scarcity of high quality liquid assets (HQLA), or high quality liquid sukūk (Note 1). The incoming U.S. Treasury secretary Steven Mnuchin has already indicated that the Trump administration's plans could rapidly turbocharge the U.S. economy, thereby altering the prevailing low-interest rate dynamic at the U.S. Federal Reserve ("U.S. Fed"), leading many to anticipate higher interest rates (Wigglesworth & Moore, 2016).Among the available liquidity management instruments in Islamic banking, only sukūk of a particular type meet the requirements of HQLA (in principle) as defined by the Basel Committee and adapted for Islamic finance by the IFSB (Islamic Financial Services Board). Candidates for HQLA are only international sukūk, i.e. sukūk that are issued in an international currency, listed, and traded not only locally but also internationally. Sovereigns and international institutions such as the IDB have issued almost all sukūk of this caliber. In this paper, we will make empirically informed qualitative projections on the outlook for HQL (high quality liquid) sukūk in the context of a rising global interest-rate environment.

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Who issues Sukuk and when?: An analysis of the determinants of Islamic bond issuance

Cited by 40 publications

References 46 publications

Nexus between risk sharing vs non-risk sharing financing and economic growth of Bangladesh

Nexus between risk sharing vs non-risk sharing financing and economic growth of Bangladesh

A Review of Islamic Investment Literature

High Quality Liquid Sukūk: Relevance, Practice, and Empirical Research in the Context of Rising Global Interest Rates

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