Determinants of Sukuk (Islamic Bonds) Yields

Abstract

Sukuk are a significant mode of financing in the Islamic financial system. Since their launch in the 1980s, Sukuk have gained recognition and popularity as a substitute for conventional bonds. Sukuk represent a proportional undivided ownership right in tangible assets, or a pool of predominantly tangible assets. The aim of this study to identify a number of factors that can be used to demonstrate the relationships between bond yields by employing OLS regression analysis. The results from the regression analysis suggested that maturity, size, Ijara, sovereign Sukuk, and credit rating have significant results on Sukuk yield. The findings of this study could be helpful for investors to get better risk-adjusted returns in bonds markets. For policy makers, it highlights the importance of further developments in Sukuk markets.

Financial Ratios and These Effects Toward Sukuk Yield with Sukuk Risk as a Mediator Variable

“…While according to Noviana andSolovida (2018), andYesuf (2016) there is a negative relationship between risk and yield. However, research conducted by Shalhoob (2018) showed no effect of risk on yield.…”

“…As for your research Melzatia & Doktoralina (2018) and Che-Yahya, Abdul-Rahim & Mohd-Rashid (2016) show a positive relationship between leverage and yield. On the other hand, research conducted by Nasir & Farooq (2017) and Shalhoob (2018) stated the absence of leverage influence on yields.…”