Determining Financial Uncertainty through the Dynamics of Sukuk Bonds and Prices in Emerging Market Indices

Muhammad Safdar Sial,Jacob Cherian,Sarminah Samad,Asma Salman,Abdul Aziz Abdul Rahman,Constantin Viorel Negrut,Abdelrhman Meero

doi:10.3390/risks10030061

Abstract

The main focus of the study is to determine the financial uncertainty while examining the Sukuk bonds prices, Sukuk bond and global emerging market indices returns dynamics. The study, with a time period ranging from 2017 to 2020, applies the quantile regression technique. The study findings show that evidence of co-moment exists between the global emerging market index and Sukuk bond price returns, except the one. There is no impact of the financial uncertainty indicator reflected by the global volatility index (VIX) on the Sukuk index returns, and even this impact is negative for (VXEEM). The causal impact among the global emerging and Sukuk bond markets will help formulate future trading strategies in particular to Islamic bond markets.

Highlights

IntroductionThe Islamic bond Sukuk is an emerging security, considered one of the growing commodities in the modern world
Academic Editor: Krzysztof JajugaThe Islamic bond Sukuk is an emerging security, considered one of the growing commodities in the modern world
Higher average returns for thefor global global volatility index are recorded for fatter tail was volatility index are recorded for VIX compared to VXEEM

Summary

Introduction

The Islamic bond Sukuk is an emerging security, considered one of the growing commodities in the modern world. The system of Riba (interest) is forbidden in Islamic law; stakeholders in Muslim communities started thinking of a system that is free of interest. Sukuk has emerged as a major Islamic financial security and as an alternative to conventional bonds. The first Sukuk was issued in 1990 in Malaysia and it turned out to be the first country to issue sovereign, corporate Sukuk. Auditing and Accounting Organization of Islamic Financial Institutions (AAOIFI) in 2003 declared Sukuk to be a “certificate of equal value representing undivided shares in ownership of tangible assets, and services in or ownership of the asset of a particular project or special investment activity”. Sukuk are designed in a way that can earn returns for the investor.

Methods

Findings

Discussion

Conclusion