Abstract
This study attempted to determine the impact of risks on returns of sukuk in different sectorial structures. The different types of risks (market risk, credit risk, operational risk and liquidity risk) are independant variables and the return of sukuk is dependant variable. Data were collected from Nasdaq Dubai HSBC sukuk index of sukuk market period from 2005 to 2015 on a monthly basis and analyzed using descriptive, correlation analysis and multi-regressions analysis. The four regression models explain 70% to 89 % of the variation.While risk exposure on global sukuk return is 88%, risk exposure on sovereign sukuk return is 70%. While risk exposure to corporate sukuk return is 89% risk exposure to financial sukuk return is 73%. The results indicate that a sovereign sukuk return is very less exposed to risk compared with other sectors corporate sukuk and financial sukuk. Therefore, it is possible to conclude that sovereign sukuk return is minimally exposed to risk. It is also found that when compared with finance sector risk is high in the corporate sector. This study recommend to maintain inflation rate at an optimal level and promote secondary markets for sukuk.
Highlights
The role of Islamic banks is much below The aftermath of the global financial crisis is expectation for the fact that they are relatively still being felt seven years on from the start of weaker to support underwriting activities for the initial collapse
The results from the value of R, R square, and adjusted R square indicate that interest rate risk, inflation rate risk, dollar rate risk, consumer confidence risk, maturity risk, credit risk, Shari’ah compliance risk and liquidity risk explain 88% to 94% of the variation on sukuk return
Results from the value of R, R square and adjusted R square indicate that interest rate risk, inflation rate risk, dollar rate risk, consumer confidence risk, maturity risk, credit risk, Shari’ah compliance risk and liquidity risk explain 89% to 94% of the variation in sukuk return
Summary
The role of Islamic banks is much below The aftermath of the global financial crisis is expectation for the fact that they are relatively still being felt seven years on from the start of weaker to support underwriting activities for the initial collapse. Expanding national debt large issuances in addition to their lack of levels and the bail out of major investment investment banking experiences. This was institutions in previously core investment based on the factual figures of dollar base and markets sent shock waves through traditional issuance base sukuk market as reported by investors. Identification of risks is made by Thomson Reuter (2013). It could be argued using experience and expertise in the Islamic that the sukuk market has grown time to time capital market. This was the greatest evidence that sukuk market is developing and becoming popular globally
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