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Islamic securities (sukuk) and economic growth: New empirical investigation from Southeast Asia using non-parametric analysis of MCMC panel quantile regression

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Abstract

Purpose – This paper aims to investigate empirically whether Islamic securities enhance economic growth in the Southeast Asian region based on the endogenous growth theory using the non-parametric analysis. Design/methodology/approach – This paper applies panel quantile regression with Markov chain Monte Carlo optimization as an optimal non-parametric approach to investigate the effect of Islamic securities on economic growth starting from 2013Q4 to 2019Q4 in Southeast Asia. Total issued Islamic securities holdings are employed as a measure for Islamic securities, while the gross domestic product is employed as a proxy for economic growth. The sample includes all working Islamic financial foundations in the top progressive Islamic securities markets’ countries of Southeast Asia (Malaysia, Indonesia and Brunei Darussalam). Findings – The findings confirm that the increase of issuing Islamic securities in Islamic capital markets of Southeast Asia is increasing the levels of economic growth, reflecting the weighty role of the Islamic capital market development as an active contributor to economic growth. Practical implications –This research would fill the literature gap by exploring Islamic securities–economic growth nexus in Southeast Asia using a robust non-parametric approach based on the endogenous growth theory for better estimation results. The findings of this review serve as a roadmap for financial analysts, policymakers and decision makers to stimulate the Islamic securities markets as another source of finance which can promote the economic growth. Originality/value – This research is the first that investigates empirically the Islamic securities–economic growth nexus in Southeast Asia using a new empirical investigation built on the non-parametric analysis and outlined within the theoretical context of the endogenous growth model to gain robust evidence about this nexus.

Suggested Citation

  • Ayoub Ledhem, Mohammed & Mekidiche, Mohammed, 2022. "Islamic securities (sukuk) and economic growth: New empirical investigation from Southeast Asia using non-parametric analysis of MCMC panel quantile regression," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 29, pages 119-138.
    • Handle: RePEc:ris:isecst:0204
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    Cited by:

    1. Jagjeevan Kanoujiya & Pooja Jain & Souvik Banerjee & Rameesha Kalra & Shailesh Rastogi & Venkata Mrudula Bhimavarapu, 2023. "Impact of Leverage on Valuation of Non-Financial Firms in India under Profitability’s Moderating Effect: Evidence in Scenarios Applying Quantile Regression," JRFM, MDPI, vol. 16(8), pages 1-20, August.

    More about this item

    Keywords

    Islamic securities (sukuk); Economic growth; Islamic capital markets; Endogenous growth theory; Panel quantile regression; Markov chain Monte Carlo (MCMC) optimization;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • K16 - Law and Economics - - Basic Areas of Law - - - Election Law
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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