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The Determinants of Sukuk Market Development: Does Macroeconomic Factors Influence the Construction of Certain Structure of Sukuk?

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  • Ali Said
  • Rihab Grassa

Abstract

The present paper examined the reasons Macroeconomic Factors Influence the Construction of Certain Structure of Sukuk. The scope of our study covers the most Sukuk issuers’ countries namely: Saudi Arabia, Kuwait, UAE, Bahrain, Qatar, Indonesia, Malaysia, Brunei, Pakistan, and Gambia observed over the period 2003-2012. The study has analyzed the influence of (i) Economic and Macroeconomic factors, (ii) Global financial Crisis (iii) Financial System (iv) Institutional Environment (v) Legal Origin and (vi) Religion and Society Factors on the Development of the Sukuk Market. The study showed that Macroeconomic factors such GDP per capita; economic size, trade openness, and percentage of Muslims have a positive influence of the growing of the Sukuk market. Financial crisis has a significant negative effect on the development of the Sukuk market since the amount of Sukuk issued in those years has declined considerably. Regulatory quality has a significant effect on the development of Sukuk market. This implies that countries ranking higher in regulation quality have a larger Sukuk market. This is can be interpreted as efficiency and reliability of regulations.

Suggested Citation

  • Ali Said & Rihab Grassa, 2013. "The Determinants of Sukuk Market Development: Does Macroeconomic Factors Influence the Construction of Certain Structure of Sukuk?," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 3(5), pages 1-18.
    • Handle: RePEc:spt:apfiba:v:3:y:2013:i:5:f:3_5_18
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    Cited by:

    1. Al-Raeai, Arafat Mansoor & Zainol, Zairy & Abdul Rahim, Ahmad Khilmy, 2019. "The Influence of Macroeconomics Factors and Political Risk on the Sukuk Market Development in Selected GCC Countries: A Panel Data Analysis," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 53(2), pages 199-211.
    2. Dariusz Piotrowski, 2017. "Challenges and barriers to the development of sukuk in the European capital market," Proceedings of Economics and Finance Conferences 4807695, International Institute of Social and Economic Sciences.
    3. Charina Dwi Rivylina Nafisah & Agus Eko Sujianto & Nur Aini Latifah & Kiki Yunita Anjarsari & Achmad Budi Susetyo, 2020. "The Determinants of Sovereign Sukuk Issuance from Organization of Islamic Cooperation Members," Technium Social Sciences Journal, Technium Science, vol. 9(1), pages 318-325, July.
    4. Rima Ayu Shintyawati & Caturida Meiwanto Doktoralina & Nurhasanah & Sri Anah, 2020. "The Volume of Issuance of Government Islamic Securities SR-007 Series, 2015¨C2018," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(5), pages 56-68, October.
    5. Mohd Saad, Noriza & Haniff, Mohd Nizal & Ali, Norli, 2020. "Corporate governance mechanisms with conventional bonds and Sukuk’ yield spreads," Pacific-Basin Finance Journal, Elsevier, vol. 62(C).
    6. Mesbahi Moghadam , Gholamreza & Asadi , Gholamhosein & Sajadi , Seyed Ali, 2015. "Conceptual Model of Islamic Commercial Paper for Banks and Credit Institutions on the Basis of Murabaha Sukuk," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 10(3), pages 73-85, July.
    7. Arafat Mansoor Al-raeai & Zairy Zainol & Ahmad Khilmy bin Abdul Rahim, 2018. "The Role of Macroeconomic Factors on Sukuk Market Development of Gulf Cooperation Council (GCC) Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 8(3), pages 333-339.
    8. Mohammadi , Shapoor & Tehrani , Reza & Khansari , Rasool, 2015. "Determinants of International Sukuk Issuance and Capacity Estimation for Iranian Financial Market," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 10(3), pages 1-28, July.
    9. Asutay, Mehmet & Hakim, Amira, 2018. "Exploring international economic integration through sukuk market connectivity: A network perspective," Research in International Business and Finance, Elsevier, vol. 46(C), pages 77-94.

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