Does the Sukuk Issuance in Turkiye Impact on Economic Growth?

Abstract

This study examines the impact of sukuk issued by participation banks and the state on economic growth in Türkiye. In this direction, econometric analysis was conducted between 2013Q1-2022Q4 using Johansen cointegration and VECM Granger causality tests. Our findings show that sukuk issuance and economic growth move together in the long run. Then, according to the long-term coefficient results, the effect of sukuk issued by participation banks on economic growth was found to be positive and significant, while the sukuk issued by the state did not have a significant effect on economic growth. In addition, according to the Granger causality test results, it was determined that there is a one-way causality relationship from GDP to participation banks’ sukuk issuance. Our results show that the issuance of sukuk both contributes to economic growth and benefits from economic growth.