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Socially responsible investment sukuk (Islamic bond) development in Malaysia

Author

Listed:
  • Mahfuzur Rahman
  • Che Ruhana Isa
  • Ginanjar Dewandaru
  • Mohamed Hisham Hanifa
  • Nazreen T. Chowdhury
  • Moniruzzaman Sarker

Abstract

Purpose - This study aims to explore the underlying issues related to the development of socially responsible investment (SRI) sukuk in Malaysia. It identifies factors attracting investors and issuers, as well as challenges for the development of SRI sukuk (Islamic bond) in Malaysia. Design/methodology/approach - This study conducted semi-structured interviews to collect data from the institutional investors, SRI sukuk issuers and arrangers, as well as researchers. A total of 19 experts were approached in which 10 participated in the interview. The thematic analysis technique is used to report the findings. Findings - This study uncovers that social contribution through business activities (i.e. investment in the education sector) is the key motivational drivers for the investors and issuers. Besides, investment risks, lack of performance measurement standards, high transaction costs, risks of return, shortage of enough Islamic bonds, investors’ confidence and lack of awareness are the major challenges for the development of SRI sukuk instruments. Research limitations/implications - Due to the challenges in finding experts on this subject matter, this study was able to manage only 10 interviews from the participants, which is a small sample size. However, the findings of this study cannot be ignored. Future research should carry out with a large sample size (i.e. at least 30 interviews) to validate the current findings. Originality/value - This study is among the pioneer in Malaysia, which explores the influencing factors of selecting Islamic bonds as an investment option. This paper provides some valuable implications for investors through discovering the challenges for the growth of SRI sukuk in Malaysia, which can also be applicable in a global setting.

Suggested Citation

  • Mahfuzur Rahman & Che Ruhana Isa & Ginanjar Dewandaru & Mohamed Hisham Hanifa & Nazreen T. Chowdhury & Moniruzzaman Sarker, 2020. "Socially responsible investment sukuk (Islamic bond) development in Malaysia," Qualitative Research in Financial Markets, Emerald Group Publishing Limited, vol. 12(4), pages 599-619, August.
    • Handle: RePEc:eme:qrfmpp:qrfm-09-2019-0117
    DOI: 10.1108/QRFM-09-2019-0117
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    Citations

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    Cited by:

    1. Husain, Afzol & Karim, Sitara & Sensoy, Ahmet, 2024. "Financial fusion: Bridging Islamic and Green investments in the European stock market," International Review of Financial Analysis, Elsevier, vol. 94(C).
    2. Adleen Farish & Norzitah Karim & Azlul Kalilah Zaghlol, 2023. "Factors Affecting the Intention to Invest in Islamic SRI in Malaysia," Information Management and Business Review, AMH International, vol. 15(4), pages 362-368.
    3. Nafith Fayez AL-Hersh & Tajul Ariffin Masron, 2024. "The Role of Culture on Islamic Finance: A Comparative Analysis from Islamic Finance Permitting Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(3), pages 13131-13159, September.

    More about this item

    Keywords

    Islamic finance; Qualitative research; Socially responsible investments; SRI sukuk; Islamic bond; G1; G2; G15; G31;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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