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What Determines Sukuk Issuance Type in Indonesia?

Asia-Pacific Contemporary Finance and Development

ISBN: 978-1-78973-274-0, eISBN: 978-1-78973-273-3

ISSN: 1571-0386

Publication date: 19 June 2019

Abstract

We empirically investigate the determinants of sukuk issuance type in Indonesia to issue either ijarah sukuk or mudharabah sukuk. We include sukuk characteristics, sharia-related factors, and firm characteristics, provide empirical evidence on the determinants of sukuk issuance type by incorporating sukuk-specific factors, firm-specific factors, and sharia compliance variables, and address the role of Sharia Supervisory Board, as the sharia representative of firm compliance for sharia products, in the issuer’s choice of sukuk type. By studying 88 sukuk issuance in Indonesia from 2009 to 2017, we find that firm profitability and the sharia compliance level have a significant effect on the probability of issuing mudharabah sukuk. Some other factors’ characteristics including sukuk yield, firm age, and inflation rate are also found to have a significant effect.

Keywords

Citation

Utami, D.E., Trinugroho, I. and Sergi, B.S. (2019), "What Determines Sukuk Issuance Type in Indonesia?", Asia-Pacific Contemporary Finance and Development (International Symposia in Economic Theory and Econometrics, Vol. 26), Emerald Publishing Limited, Bingley, pp. 195-206. https://doi.org/10.1108/S1571-038620190000026010

Publisher

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Emerald Publishing Limited

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