The Role of Political Risk and Financial Development Factors on Sukuk Market Development of Gulf Cooperation Council (GCC) Countries

Al-raeai, Arafat Mansoor; Zainol, Zairy; Rahim, Ahmad Khilmy Abdul

doi:10.5296/ajfa.v10i1.13106

Cited by 24 publications

(29 citation statements)

References 26 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…The findings indicated that Sukuk financing has a significant effect on the economic growth in Southeast Asia. Unlike what Echchabi et al (2018) have determined that Sukuk issuance has no significant effect on economic growth, the empirical results of this paper according to the endogenous growth model are reliable with the findings of Yıldırım et al (2020), Al-Raeai et al (2018, Sari et al (2018), Malikov (2017), Mitsaliyandito et al (2017), Smaoui and Nechi (2017) and Khoutem (2014)…”

Section: Discussionsupporting

confidence: 76%

Does Sukuk financing boost economic growth? Empirical evidence from Southeast Asia

Ledhem¹

2020

PRR

View full text Add to dashboard Cite

Purpose This paper aims to investigate empirically whether Sukuk financing is boosting the economic growth in Southeast Asia within the framework of the endogenous growth model. Design/methodology/approach This paper applied dynamic panel one-step system generalized method of moments as an optimal estimation approach to investigate the impact of Sukuk financing on economic growth in Southeast Asia spanning from 2013Q4–2019Q3. Sukuk financing was proxied by the total issued Sukuk holdings, while economic growth was proxied by gross domestic product. The sample covered all full-fledged Islamic financial institutions in the most developed Sukuk financial markets countries in Southeast Asia (Malaysia, Indonesia and Brunei). Findings The findings demonstrated that Sukuk financing is boosting economic growth in Southeast Asia, which reflects the significant role of the Islamic financial markets of Sukuk as a vital contributor to economic growth. Practical implications This paper would fill the literature by investigating the link between Sukuk financing and economic growth in Southeast Asia within the framework of the endogenous growth model, as the outcome of this paper serves as a guide for financial researchers, decision-makers and policymakers to improve the Sukuk market globally as an alternative financing source for the best contribution to economic growth. Originality/value This paper is the first that investigates empirically the link between Sukuk financing and economic growth in Southeast Asia with a new theoretical context of the endogenous growth model to gain robust information about this link.

show abstract

Section: Discussionsupporting

confidence: 76%

Does Sukuk financing boost economic growth? Empirical evidence from Southeast Asia

Ledhem¹

2020

PRR

View full text Add to dashboard Cite

show abstract

“…This study employs several macroeconomic factors that characterize the GCC economics which could affect the sukuk market growth, namely the savings rate, the exchange rate, the trade openness, the banking system size, and the stock market capitalization. Since a study by Al-raeai et al (2018b) insisted that the relationship between political risk and the sukuk market development remains ambiguous, this study extends previous studies by examining the political risk and its effect on the GCC sukuk market development. Thus, the findings could contribute to the GCC markets which are very sensitive to the regional political event.…”

Section: Introductionmentioning

confidence: 63%

“…Thus, the huge supply of savings and strong investment demand in GCC might do mostly through the local banking system and stock market, thus affecting the sukuk market development. Since a study by Al-raeai et al (2018a) suggested that the role of macroeconomic factors on the GCC sukuk market needs further empirical investigation. Hence, this study analyzes the influencing role of the savings rate, the banking system and the stock market on the development of sukuk market.…”

Section: Literature Reviewmentioning

confidence: 99%

The Infuence of Macroeconomics Factors and Political Risk on the Sukuk Market Development in Selected GCC Countries: A Panel Data Analysis

2019

JEM

View full text Add to dashboard Cite

In light of the countries' attempt to develop their economies and follow stable macroeconomic policies that stimulate the sukuk markets and the stress placed on the political stability of the countries, investigating the role of political risk and macroeconomic factors is crucial to sustain a country's Islamic financial development. Therefore, this study used the panel data to examine the influence of the macroeconomic factors and political risk on the sukuk market development in the selected GCC countries, namely Saudi Arabia, United Arab Emirate, Bahrain, Qatar and Kuwait from 2001 to 2016. The model of sukuk market development is extended by incorporating the six specific characteristics of GCC countries. The diagnostic tests affirm that the most preferred model to explain the determinants of sukuk market development is by using the Pooled Ordinary Least Square (POLS) Model. The findings reveal that the banking sector and exchange rates are negative and have significant effects on the sukuk market development. The consideration of the increasing level of trade openness is vital due to its major contribution to enhance the sukuk market development. Interestingly, this study finds a positive significant association between the political risk and the sukuk market development. In order to promote the sukuk market development in the region, it is important to develop strategies for integrating and linking the banking sector and the sukuk market in order to promote the sukuk market by creating a scale economy and the required financial market infrastructure.

show abstract

“…Other studies proposes a framework to explain the main macroeconomic determinants of SMD with a focus on the GCC countries that have the largest region in terms of the Islamic financial assets. It is anticipated that the outcome will support policymakers to improve the current state of Sukuk market (Al-raeai et al, 2018).…”

Section: Introductionmentioning

confidence: 99%

Does Profitability, Firm Size, and Macroeconomic Variable Affect Yield to Maturity of Corporate Sukuk?

Utami

Rohmana²

2020

J.Rev

View full text Add to dashboard Cite

The purpose of of this research is to examine the influence of profitability, firm size, and macroeconomic variable on the yield to maturity of corporate sukuk. The yield to sukuk maturity that will be received by investors illustrates the level of investor profit but the yield level also describes the level of risk borne by investors. This research was conducted on all companies listed on the Indonesia Stock Exchange in the 2015-2018 period which issued sukuk ijarah and published its financial statements during the research period. The research samples is 54th ijarah sukuk This research was conducted using a quantitative approach with panel data. The data analysis technique used in this study is panel data regression with a fixed effect model. The results showed that profitability projected with Return on Asset did not affect the yield to maturity of sukuk ijarah, the size of the firm negatively affected the yield to maturity of sukuk ijarah, the BI-Rate variable had a positive and significant effect on yield to maturity of sukuk and inflation had a negative effect on yield of ijarah sukuk.

show abstract

The Role of Political Risk and Financial Development Factors on Sukuk Market Development of Gulf Cooperation Council (GCC) Countries

Cited by 24 publications

References 26 publications

Does Sukuk financing boost economic growth? Empirical evidence from Southeast Asia

Does Sukuk financing boost economic growth? Empirical evidence from Southeast Asia

The Infuence of Macroeconomics Factors and Political Risk on the Sukuk Market Development in Selected GCC Countries: A Panel Data Analysis

Does Profitability, Firm Size, and Macroeconomic Variable Affect Yield to Maturity of Corporate Sukuk?

Contact Info

Product

Resources

About