Issuers’ Insight for Identifying Choice of Sukuk Structuring

Datien Eriska Utami, Zulfa Irawati

Abstract


One of the common problems that occur in Indonesia concerning the issuance of Sukuk is the limited issuance of Sukuk by companies. There were only two types of Sukuk issuance issued by companies, namely Mudaraba Sukuk and Ijarah Sukuk, and based on the data of OJK Sukuk Statistics, as of 2017 the issuance of Ijarah Sukuk still dominates Sukuk issuance. We investigated to discover how issuers of Sharia bonds (Sukuk) choose between the issuance of Mudaraba Sukuk and Ijarah Sukuk structures, based on the determinant factors of company characteristics, variables related to Sharia, and type of company industry. The population in this study were companies that issue Mudaraba Sukuk and Ijarah Sukuk. The sampling technique used is purposive sampling. The selection of the research sample consists of 27 issuers that issued 59 Ijarah Sukuk and 31 Mudaraba Sukuk during the period of observation. By implementing a probit regression analysis, the results showed that leverage level, Sharia compliance, and financial industry type might all influence the choice of companies to issue Mudaraba Sukuk.

JEL Classification: G12, G23, O16

DOI: https://doi.org/10.26905/jkdp.v22i4.2368


Keywords


Ijarah; Mudaraba; Sharia Compliance; Sukuk

Full Text:

PDF

References


Ahmad, N., & Muda, M. (2013). Exchange rate pass-through estimates for Sukuk issuing countries. Procedia Economics and Finance, 7, 134–139. https://doi.org/10.1016/S2212-5671(13)00227-X.

Aloui, C., Hammoudeh, S., & Hamida, H. B. (2015). Co-movement between Sharia stocks and Sukuk in the GCC markets: A time-frequency analysis. Journal of International Financial Markets, Institutions, and Money, 34, 69–79.

Ariff, M., & Safari, M. (2012). Are Sukuk securities the same as conventional bonds? Afro Eurasian Studies, 1(1), 101–125. https://doi.org/10.2139/ssrn.1783551.

Arundina, T., Omar, M. A., & Kartiwi, M. (2015). The predictive accuracy of Sukuk ratings; Multinomial logistic and neural network inferences. Pacific Basin Finance Journal, 34, 273–292. https://doi.org/10.1016/j.pacfin.2015.03.002.

Azmat, S., Skully, M., & Brown, K. (2014a). Issuer’s choice of Islamic bond type. Pacific Basin Finance Journal, 28, 122–135. https://doi.org/10.1016/j.pacfin.2013.08.008.

Azmat, S., Skully, M., & Brown, K. (2014b). The Shariah compliance challenge in Islamic bond markets. Pacific Basin Finance Journal, 28, 47–57. https://doi.org/10.1016/j.pacfin.2013.11.003.

Azmat, S., Skully, M., & Brown, K. (2017). The (little) difference that makes all the difference between Islamic and conventional bonds. Pacific Basin Finance Journal, 42, 46–59. https://doi.org/10.1016/j.pacfin.2015.12.010.

Bhuiyan, R. A., Rahman, M. P., Saiti, B., & Mat Ghani, G. Bin. (2017). Financial integration between Sukuk and bond indices of emerging markets: Insights from Wavelet Coherence and Multivariate-GARCH analysis. Borsa Istanbul Review, 18(3), 218-230. https://doi.org/10.1016/j.bir.2017.11.006.

Chava, S., Kumar, P., & Warga, A. (2010). Managerial agency and bond covenants. Review of Financial Studies, 23(3), 1120–1148. https://doi.org/10.1093/rfs/hhp072.

Dusuki, A. W. (2010a). Do equity-based Sukuk structures in Islamic capital markets manifest the objectives of Shariah? Journal of Financial Services Marketing, 15(3), 203–214. https://doi.org/10.1057/fsm.2010.17.

Elhaj, M. A. A., Muhamed, N. A., & Ramli, N. M. (2015). The influence of corporate governance, financial ratios, and Sukuk structure on Sukuk rating. Procedia Economics and Finance, 31, 62–74. https://doi.org/10.1016/S2212-5671(15)01132-6.

Fatah, D. A. (2011). Perkembangan obligasi syari’ah (sukuk) di Indonesia: Analisis peluang dan tantangan. Al-’Adalah, 10(1), 281–301.

Godlewski, C. J. (2014). What influences stock market reaction to Sukuk issues? The Impact of Scholars and Sukuk Types, 1–26.

Godlewski, C. J., Turk-Ariss, R., & Weill, L. (2013). Sukuk vs. conventional bonds: A stock market perspective. Journal of Comparative Economics, 41(3), 745–761. https://doi.org/10.1016/j.jce.2013.02.006.

Grassa, R. (2017). Corporate choice between conventional bond and Sukuk issuance evidence from GCC countries. Research in International Business and Finance, 45, 454-466. https://doi.org/10.1016/j.ribaf.2017.07.179.

Halim, Z. A., How, J., & Verhoeven, P. (2017). Agency costs and corporate Sukuk issuance. Pacific Basin Finance Journal, 42, 83–95. https://doi.org/10.1016/j.pacfin.2016.05.014.

Ibrahim, M. H. (2015). Issues in Islamic banking and finance: Islamic banks, Shari’ah-compliant investment, and Sukuk. Pacific Basin Finance Journal, 34, 185–191. https://doi.org/10.1016/j.pacfin.2015.06.002.

Jobst, A., Kunzel, P., Mills, P., & Sy, A. (2008). Islamic bond issuance: What sovereign debt managers need to know. International Journal of Islamic and Middle Eastern Finance and Management, 1(4), 330–344. https://doi.org/10.1108/17538390810919637.

Klein, P. O., & Weill, L. (2016). Why do companies issue Sukuk? Review of Financial Economics, 31, 26–33. https://doi.org/10.1016/j.rfe.2016.05.003

Loderer, C. F., & Waelchli, U. (2010). Firm age and performance. Discussion Paper No. 09-18. German Economic Association of Business Administration. http://dx.doi.org/10.2139/ssrn.1342248

Mohamed, H. H., Masih, M., & Bacha, O. I. (2015). Why do issuers issue Sukuk or conventional bond? Evidence from Malaysian listed firms using partial adjustment models. Pacific Basin Finance Journal, 34, 233–252. https://doi.org/10.1016/j.pacfin.2015.02.004.

Nagano, M. (2017). Sukuk issuance and information asymmetry: Why do firms issue Sukuk? Pacific Basin Finance Journal, 42, 142–157. https://doi.org/10.1016/j.pacfin.2016.12.005.

Purnamawati, I. (2015). Perbandingan Sukuk dan obligasi (telaah dari perspektif keuangan dan akuntansi). Jurnal Akuntasi, 11(1), 62–71.

Saad, N. M., Haniff, M. N., & Ali, N. (2016). Firm’s growth and sustainability: The role of institutional investors in mitigating the default risks of Sukuk and conventional bonds. Procedia Economics and Finance, 35, 339–348. https://doi.org/10.1016/S2212-5671(16)00042-3.

Said, A., & Grassa, R. (2013). The determinants of Sukuk market development: Does macroeconomic factors influence the construction of certain structure of Sukuk ? Journal of Applied Finance & Banking, 3(5), 251–267.

Smaoui, H., Mimouni, K., & Temimi, A. (2017). Sukuk, banking system, and financial markets: Rivals or complements? Economics Letters, 161, 62–65. https://doi.org/10.1016/j.econlet.2017.09.014.

Sukardi, B. (2012). Kepatuhan syariah (shariah compliance) dan inovasi produk bank syariah di Indonesia. AKADEMIKA: Jurnal Pemikiran Islam, 53(10), 1–17.

Tariq, A. A. (2004). Managing financial risks of Sukuk structures. Loughborough University UK, 1–86.

Warsame, M. H., & Ireri, E. M. (2016). Does the theory of planned behaviour (TPB) matter in Sukuk investment decisions? Journal of Behavioral and Experimental Finance, 12, 93–100. https://doi.org/10.1016/j.jbef.2016.10.002.

Wilson, R. (2006). Innovation in the structuring of Islamic Sukuk securities. 2nd Banking and Finance International Conference. Beirut: Lebanese American University, 24(3), 170–181. https://doi.org/10.1108/08288660810899340.

Zulkhibri, M. (2015). A synthesis of theoretical and empirical research on Sukuk. Borsa Istanbul Review, 15(4), 237–248. https://doi.org/10.1016/j.bir.2015.10.001.




DOI: https://doi.org/10.26905/jkdp.v22i4.2368

Refbacks

  • There are currently no refbacks.


Bookmark and Share


Jurnal Keuangan dan Perbankan (Journal of Finance and Banking)

Diploma Program of Banking and Finance, Faculty of Economics and Business, University of Merdeka Malang

Published by University of Merdeka Malang

Mailing Address:
2nd floor Finance and Banking Building, Jl. Terusan Raya Dieng No. 57 Malang, East Java, Indonesia
Phone: +62 813-3180-1534
Email: jkp@unmer.ac.id

This work is licensed under a Creative
Commons Attribution-ShareAlike 4.0