Determinant Sukuk Market Development
Abstract views: 29
,
PDF downloads: 11
Abstract
The research covers the significant phenomenon of sukuk in the global economy post-crisis. It has proven index growth against conventional securities. There is still a literature gap regarding the effect of institutional quality on Islamic financial markets, bringing sukuk into the picture despite enjoying progressive growth in Sukuk. Therefore, the research aims to empirically investigate the influence of macroeconomics and institutional quality on the sukuk market development based on secondary data from WDI, ICRG, and IIFM. The study objects thus include the top five sukuk-issuing countries from 2008 to 2023: Malaysia, U.A.E., Saudi Arabia, Indonesia, and Bahrain-but analyzed with the aid of dynamic panel data regression. Results indicate that GDP per capita, exchange rate, and indicators of institutional quality significantly and positively influence the sukuk market, while inflation and corruption control have significant negative impacts; hence, this research underscores the requirement of macroeconomic stability and better institutional quality for better development of the Islamic capital market.
Downloads
References
Aduda, J., Mwelu Masila, J., & Onsongo, E. (2012). The Determinants of Stock Market Development: The Case for the Nairobi Stock Exchange.
Asian Development Bank. (2005). Improving the investment climate in Indonesia. Economics and Research Department, Development Indicators and Policy Research Division.
Azis, A., Pahlevi, C., & Pakki, E. (2021). The Effect of Sukuk Issuance on Price Reaction and Growth of Sharia Capital Market. Hasanuddin Journal of Business Strategy, 3(1), 1–18. https://doi.org/10.26487/hjbs.v3i1.408
Basyariah, N., Kusuma, H., & Qizam, I. (2021). Determinants of Sukuk Market Development: Macroeconomic Stability and Institutional Approach. Journal of Asian Finance, Economics and Business, 8(2), 0201–0211. https://doi.org/10.13106/jafeb.2021.vol8.no2.0201
Bhattacharyay, B. N. (2013). Determinants of bond market development in Asia. Journal of Asian Economics, 24, 124–137. https://doi.org/10.1016/j.asieco.2012.11.002
Boukhatem, J. (2022). How does financial risk affect sukuk market development? Empirical evidence from ARDL approach. Heliyon, 8(5). https://doi.org/https://doi.org/10.1016/j.heliyon.2022.e09453
Bozhenko, V., Boyko, A., & Voronenko, I. (2023). Corruption as an Obstacle of Sustainable Development (pp. 395–407). https://doi.org/10.1007/978-3-031-28131-0_27
Cherif, M., & Gazdar, K. (2010). Macroeconomic and institutional determinants of stock market development in MENA region. International Journal of Banking and Finance, 7(1), 1–21. http://dx.doi.org/10.32890/ijbf2010.7.1.8403
Doucouliagos, Haan, C. de, Sturm, J., & Jan-Egbert. (2020). What Drives Financial Development? A MetaRegression Analysis. http://dx.doi.org/10.1093/oep/gpab044
Duong, H. N., Goyal, A., Kallinterakis, V., & Veeraraghavan, M. (2022). Democracy and the pricing of initial public offerings around the world. Journal of Financial Economics, 145(1), 322–341. https://doi.org/10.1016/j.jfineco.2021.07.010
Elmorabit, F., Zaheer, S., Boussetta, M., & Achour, F. Z. (2023). The Potential Role of Sukuk in Promoting Economic Growth. Journal Of Economics, Finance And Management Studies, https://doi.org/10.47191/jefms/v6-i1-49
Godlewski, Christopher J. Turk-Ariss, R., & Weill, L. (2013). Sukuk vs Conventional Bonds: a stock Market Perspective. Journal of Comparative Economics, 41(3), 745–761. https://doi.org/10.1016/j.jce.2013.02.006
Grassa, R., & Gazdar, K. (2012). The Determinants of the Development of the Sukuk Market in GCC Countries. International Conference On Islamic Capital Markets. https://ssrn.com/abstract=2145934
Ibrahim, S. N., Mohd Nor, A., Mohd Rafien, N. S., Ismail, S., & Abd Rahman, N. H. (2022). Issue of Sukuk Market Development and Islamic Banking Institution: A Conceptual Paper. International Journal of Academic Research in Business and Social Sciences, 12(12). https://doi.org/10.6007/IJARBSS/v12-i12/15432
ICD-Thomson Reuters. (2018). Islamic Finance Development Indicator Rule Book.
IIFM. (2021). International Islamic Financial Market, IIFM sukuk report July 2021, 10th edition.
Jeena Antony, D. E. S. (2022). Impact Of Personality Traits On Stock Market Investors With Regard To Risk Tolerance. Journal of Pharmaceutical Negative Results, 3513–3521. https://doi.org/10.47750/pnr.2022.13.S07.451
Leff, N. H., & Heidenheimer, A. I. (2017). Economie Development Through Bureaucratic Corruption 1. In Political Corruption (pp. 307–320). Routledge. https://doi.org/10.4324/9781315126647-29
Li, Q., Owen, E., & Mitchell, A. (2018). Why Do Democracies Attract More or Less Foreign Direct Investment? A Metaregression Analysis. International Studies Quarterly, 62(3). https://doi.org/10.1093/isq/sqy014
Meysam, B. (2011). Corruption and stock market development: A quantitative approach. Physica A: Statistical Mechanics and Its Applications, 390(23–24), 4514–4521. https://doi.org/10.1016/j.physa.2011.07.024
Miller, N., Challoner, J., & Atta, A. (2007). UK welcomes the sukuk. International Financial Law Review, 5(26), 24–25.
Mirza, A. R., & Sultana, N. (2020). Impact of Economic Factors to Determine the Sukuk Market Development: An Empirical Analysis. IJIEG, 1(1). https://ojs.mul.edu.pk/index.php/IJIEG/article/view/18
Muharram, H., Anwar, R. J., & Robiyanto, R. (2019). Islamic Stock Market and Sukuk Market Development, Economic Growth and Trade Openess. Business: Theory and Practice, 20, 196–207. http://dx.doi.org/10.3846/btp.2019.19
Najib, M. T. A., Sa’adah, S. R., & Putro, R. L. (2023). Penentu Perkembangan Pasar Sukuk: Makroekonomi dan Institutional Quality. 2(1), 1–11. https://doi.org/10.59066/jmae.v2i1.238
Pradhan, R. P., Nair, M. S., Arvin, M. B., & Hall, J. H. (2023). Institutional quality, financial development and sustainable economic growth among lower income countries. Natural Resources Forum, 47(3), 435–483. https://doi.org/10.1111/1477-8947.12291
Pratama, B. S., Fikri, H. M., & Wirdyaningsih. (2020). Optimization of Sukuk to Support Sustainable Development in Indonesia. Proceedings of the International Conference on Law, Governance and Islamic Society (ICOLGIS 2019). https://doi.org/10.2991/assehr.k.200306.181
Said, A., & Grassa, R. (2013). The Determinants of Sukuk Market Development: Does Macroeconomic Factors Influence the Construction of Certain Structure of Sukuk? Journal of Applied Finance & Banking, 3(5), https://ssrn.com/abstract=2318233
Smaoui, H., & Ghouma, H. (2020). Research in International Business and Finance Sukuk Market Development and Islamic Banks' Capital Ratios. Research in International Business and Finance. 51, 17. https://doi.org/10.1016/j.ribaf.2019.101064
Smaoui, H., & Khawaja, M. (2017). The Determinants of Sukuk Market Development. Emerging Markets Finance and Trade 53, 7, 1501–1518. https://doi.org/10.1080/1540496X.2016.1224175
Sokawati Karina, R., Sri Pujiningsih, & Makaryanawati. (2023). Literature Study of Sukuk as a Sharia Securities Instrument. Economics and Business Journal (ECBIS), 1(4), 411–426. https://doi.org/10.47353/ecbis.v1i4.43
Tsapko-Piddubna, O. (2021). Inclusive Growth Policy And Institutional Assessment: The Case Of Central And Eastern European Countries. Baltic Journal of Economic Studies, 7(2), 233–239. https://doi.org/10.30525/2256-0742/2021-7-2-233-239
Utami, C. V., Kismawadi, E. R., & Eliza, Z. (2021). Pengaruh Inflasi, Sertifikat Bank Indonesia Syariah dan Nilai Tukar Terhadap Perkembangan Sukuk Di Indonesia. JIM (Jurnal Ilmiah Mahasiswa), 3(2). https://doi.org/10.32505/jim.v3i2.3483
Utami, D. E., & Irawati, Z. (2021). The Role of the Financial and Macroeconomy Industry on the Development of the Sukuk (Sharia Compliant Bonds) Market. Academic Journal of Interdisciplinary Studies, 10(4). https://doi.org/10.36941/ajis-2021-0112
Zahra, A., Kacho, A. B., & Ahmadpour, A. (2021). The Impact of Institutional Quality on Financial Development (Case Study: Eurasian Developing Countries). The Journal of Economic Studies and Policies, 8(1). https://economic.mofidu.ac.ir/jufile?ar_sfile=2480222
Copyright (c) 2025 M. Thoha Ainun Najib, Silky Roudhotus Sa’adah
This work is licensed under a Creative Commons Attribution 4.0 International License.
