Sukuk Issuance Research Articles

Kinerja Keuangan Terhadap Return Saham

This research aims to see the effect of financial performance on stock returns. Stock returns in this study are the dependent variable while financial performance is represented by liquidity and leverage proxies.This type of research is quantitative. The research sample is companies that issue sukuk listed on the Indonesia Stock Exchange in 2017-2021, consisting of 7 companies with five years of observation and the sample determination method used is purposive sampling. The analytical method in this research uses panel data regression analysis with a fixed effects model using Eviews version 10.0. The research results show that the variables liquidity and leverage simultaneously influence stock returns. Meanwhile, partially the Liquidity variable has an effect on Stock Returns. The leverage variable influences stock returns.

Analysis of Opportunities and Challenges of Blockchain Technology in the Islamic Banking Industry (Case Study on the Use of Smart Contracts)

Purpose: This research concludes that, with a strategic and collaborative approach, blockchain technology can be an effective tool for transforming the Islamic banking industry. Methodology: This study uses qualitative methods with literature analysis from 19 journals, one book, and three websites to explore how this technology can be applied in risk management, asset tracking, and interbank transactions. Results: The research results reveal that this technology can reduce fraud, manipulation, and cyberattacks, as well as increase customer and sharia authority trust through transaction transparency. However, there are major challenges to overcome, such as immature regulatory aspects, the need for a strong infrastructure, and a lack of understanding of this technology among customers. This study also emphasizes the importance of collaboration between Islamic banking, regulators, and other stakeholders to maximize the potential of blockchain technology. Limitations: Case studies on the use of smart contracts in the Sharia banking industry show that this technology can increase efficiency and Sharia compliance, reduce administration costs, and simplify transactions. Contribution: This study describes the role of blockchain in the sukuk issuance process. Blockchain technology, which is known for its decentralization, transparency, and security characteristics, has great potential to increase efficiency and transparency in Sharia banking operations.

DO INVESTORS GET BENEFITS FROM CORPORATE GREEN SUKUK ISSUANCE

This study evaluates whether investors benefit from green sukuk by examining the responses of stock returns to the announcements of corporate green sukuk (green Islamic bonds) issuance. Applying the standard event study methodology, it finds that stock returns respond positively and significantly to the announcements of green sukuk issuance, suggesting that investors perceive and react favorably to the announcement. This significantly positive response is observed both for the individual firm (through CARs) and for a sample of all firms (through CAARs). Thus, it can be concluded that investors benefit from the announcements of green sukuk issuance. Further, this study draws a comparative analysis of investors’ response to the announcements of corporate green sukuk and corporate green bond issuance, and the findings also show that investors respond positively to the announcements of green bond issuances. However, the investors’ response is slightly higher to the announcements of corporate green sukuk issuance compared to corporate green bonds, and the investors get slightly more benefit from green sukuk issuance as compared to green bond issuance. These finding inform policymakers for the formulation of strategies to attract investors by integrating green bonds with shariah principles to fund environment-friendly projects and consequently mitigate the climate change risk.

Sustainable and responsible investment (SRI) Sukuk: lessons from Khazanah’s Sukuk Ihsan

Purpose SRI Sukuk, with its outcome-based emphasis, aims to align the Islamic finance industry with its original ideals and address criticisms related to form over substance. In Malaysia, while the pioneering Sukuk Ihsan was a “social” sukuk, recent SRI Sukuk issuances have predominantly been “green” or “sustainable” sukuk. This paper aims to evaluate the Malaysian SRI Sukuk market, identifying factors favouring “green” sukuk. It also examines whether structural issues in Sukuk Ihsan deterred subsequent issuers from “social” sukuk. The emergence of SRI Sukuk responds to sustainable development goals and the shift towards a low-carbon economy. Sukuk Ihsan, as the first Shariah-compliant pay-for-success structure, poses complexity and risk management challenges to meet performance criteria. Design/methodology/approach The study used a qualitative method in the form of a critical review of literature, interview sessions with experts and stakeholders who are familiar with SRI Sukuk and Sukuk Ihsan and a case study analysis of Sukuk Ihsan. Findings The popularity of “green” sukuk reflects the growing global environmental consciousness. The main factors driving the popularity of “green” sukuk are the maturity of the market and the existence of a strong supporting infrastructure for “green” issuances while the positive profiling benefits and availability of incentives for “green” issuances also contribute to a lesser extent. The recommendations include the promotion of “social” sukuk by regulators through a focus on establishing a similar supporting infrastructure for “social” sukuk as there are for SRI and standard Sukuk. In addition, issuers of “social” sukuk may want to reconsider the inclusion of key performance indicators (“KPI”) into the structure of future “social” sukuk issuances. Research limitations/implications Although all respondents considered Sukuk Ihsan to be a success, some potential areas of improvement were also noted. These include the structuring of future “social” sukuk issuances with a bigger discount to compensate for the additional risk being assumed by the investor; the need to be more careful in the KPI selection process; and one respondent even went so far as to suggest the possibility of totally removing the step-down feature of Sukuk Ihsan. Practical implications Industry implications of Sukuk Ihsan study include findings that require balancing disclosure and economics by providing additional disclosure requirements for SRI Sukuk that may pose risks without corresponding benefits for issuers. KPI selection and investor confidence should also be properly identified, as KPIs are essential for the pay-for-success model to work successfully. For sukuk holders, findings indicate that any approval for waivers during issuance can impact investor confidence negatively. Investor literacy and impact understanding should also be improved for social Sukuk success. Investors should understand the different risk exposures and evolving impact requirements vital for sustainable growth. Social implications The findings provide significant implications for social impact Sukuk issuance. They include providing a substantial case study for future social impact issuances, based on the pioneering impact of Sukuk Ihsan. Furthermore, Sukuk Ihsan’s unqualified success validates the feasibility of socially responsible sukuk. Despite its early introduction, both tranches being fully subscribed reflects robust investor interest. Stakeholders were also proud of their involvement in such an initiative, viewing it as a significant achievement in creating societal impact. Originality/value Although there have been several prior studies done on Sukuk Ihsan, the focus of those studies was on its structure and the novelty of its “step down” returns structure where investors would receive lower returns if certain key performance indicators (“KPIs”) are met by Yayasan AMIR in the execution of its Trust School Programme. Bearing in mind that the first Sukuk Ihsan has a June 2022 maturity date, and the results of its KPIs were announced in December 2021, to the best of the authors’ knowledge, this is the only documented case study that comprehensively reviews Sukuk Ihsan and identifies lessons learned and/or opportunities for improvement for the benefit of potential SRI Sukuk issuers in the future.

Constructing Sukuk-linked Awqaf (endowment) model

PurposeIslamic endowment (awqaf), particularly awqaf land, is one of the potential Islamic social assets to serve the public interest, particularly to provide public infrastructures such as business centers, public hospitals and airports. However, unfortunately, most of them are still unproductive lands, especially in the form of idle lands. One problem to use such unproductive awqaf lands is the lack of awqaf land model as the platform to use such awqaf lands. This paper aims to construct and propose a model called Sukuk-linked Awqaf (SLA) to use awqaf lands as an underlying for Sukuk issuance.Design/methodology/approachThis paper constructs mechanisms and formulas of SLA by involving Sukuk issuer, awqaf management (Nadzhir), Sukuk investors and tenants of the infrastructure. In particular, the SLA model is proposed based on the unique characteristics of both awqaf asset and Ijarah (leasing) Sukuk, considers the intention of state-owned enterprise (SOE) to construct buildings to be rented to the tenant and to be owned by the awqaf manager and formulates equations and uses net present value theory to determine Nadzhir and Sukuk investors’ investment decisions.FindingsEngaging awqaf land with SLA model can ease its benefit for the society. The model addresses the strategic roles of Nadzhir, SOE, investors and contractor in using awqaf land.Research limitations/implicationsThe SLA model could ease related parties to use the awqaf land for the sake of public benefits.Originality/valueTo the best of the author’s knowledge, this is the first assessment on the potential implementation of Islamic hedging with a commodity as an alternative hedging in Indonesia.

Sukuk structure and risk exposures: evidence from an originator perspective

Purpose Despite the growing prevalence of Sukuk issuances, there remains a significant knowledge gap concerning their specific risk exposures to originators of issuances rather than to investors, particularly compared to conventional bonds, and the implications of this for the corporate governance (CG) of originators. This study aims to examine the risks faced by originators and sponsors of Sukuk issuances, drawing insights from unique Sukuk case studies. The distinct characteristics of Sukuk include legal intricacies and Shari’ah compliance, which pose particular challenges to originators. Effective risk management is a key issue for CG in these areas. Design/methodology/approach A sequential explanatory case study method is employed, utilising the content analysis approach to extract information from various articles, reports and Sukuk case studies, including Tamweel Residential Mortgage Backed Sukuk and Tamweel Sukuk Limited. Findings The findings underscore the critical issues for originators in navigating risks within Sukuk structures, particularly concerning Shari’ah non-compliance and default risk. This highlights the importance of managing risks inherent in Sukuk structures, considering both Shari’ah compliance obligations and the sustainability of Sukuk in terms of default risk. Default scenarios raise unique questions regarding stakeholders' interests, specifically those of shareholders, investors and creditors, contingent on the Sukuk issuance's structure and contractual basis of the Sukuk issuance. Practical implications The need for a CG framework conducive to the effective management of these risks, thereby ensuring both Shari’ah compliance and long-term viability, which is crucial for the sustainable growth of Sukuk in the financial landscape. Originality/value This study offers a unique perspective by focusing on the risks faced by originators of Sukuk issuances, a largely unexplored area, and underscores the importance of effective risk management for CG and sustainability of Sukuk issuances.

The Effect of Institutional and Shariah Governance on Sukuk and Bond Performance in Asian Region

Purpose: This study investigates the influence of shariah and institutional governance on the performance of sukuk and bonds in the Asian landscape, particularly Malaysia and Indonesia. It aims to unravel the impact of Shariah principles and various aspects of institutional governance (IG) indicators; hence offering a deeper understanding of sukuk and bond performance. Method: Data was collected from 34 companies in Asian region. The study developed and validated the SG index using principle component analysis. Results and Discussion: The findings from panel regression analysis showed that Shariah and institutional governance improve sukuk performance. In addition institutional governance affected bond performance. Indicators of IG affected positively sukuk issuance and return. However, only government effectiveness and rule of law affected the bond issuance. All the indicators affected bond return except voice and accountability. Implications of the Research: The study contributed to the literature by examined both type of governance and compared between their effects. It also developed an SG index for financial and non-financial companies. Improving Shariah governance and institutional governance will enhance sukuk and bond performance. Originality/value: The study contributed to the knowledge by developing an index of shariah governance for financial and non-financial organization.

Analyzing Financial Synergy Through Leland's (2007) Framework and Ensuring Shariah Compliance in Sukuk Issuance

The objective of this study is to determine whether issuing sukuk as part of separate financing of a project would increase the value of business. This study adopts Leland Framework (2007) to measure the impact of several variables in separate financing to the value of the firm. The findings revealed that changes in maturity period, tax rate, interest rate and standard deviation can bring similar or different effects depending on each variable. It can be concluded that the separate financing using hypothetical sukuk issuance has a positive effect on the firm. This is visible from the value of the change in optimally levered firm as well as firm value in this paper which both are positive. This shows that the variables above have an impact on the optimal capital structure as well as the results of structured financing. This study further proposes to modify Leland’s model (2007) by using a stochastic model rather than a static one, considering that some sukuk use a profit-sharing contract.

The impact of geopolitical risk and COVID-19 pandemic stringency on Sukuk issuance in Malaysia

The impact of geopolitical risk and COVID-19 pandemic stringency on Sukuk issuance in Malaysia

The Impact of Islamic Securities Issuances on Domestic Investment: A Case Study of Malaysia

This study aims to analyze the impact of Islamic securities issuance on domestic investment in Malaysia during the period 2005-2019. Malaysia is considered a model, since it is the world's first country in issuing Islamic securities, the most important of which is Islamic Sukuk. This study investigates the efficiency of the Sukuk issuance market in Malaysia and its impact on the investment growth rate in the issuing economic sectors. Finally, it estimates the relationship between Islamic Sukuk issuance and domestic investment using the Cointegration Test and the Vector Error Correction Model (VECM). The results show a high performance of the Islamic Sukuk-market indicators in Malaysia, as well as a long-run equilibrium relationship between the estimated variables. In addition, Sukuk issuance has a significant positive impact on domestic investment in Malaysia.

PERAN DAN PERKEMBANGAN GREEN SUKUK PADA PEMBANGUNAN INFRASTRUKTUR DI INDONESIA

Sustainable development aims to open up opportunities for the issuance of Sukuk (Sharia Securities) as an alternative sustainable financing for infrastructure development in Indonesia, along with public awareness of the concept of sustainable and environmentally friendly development, a new investor market has been launched. Green Sukuk emerged as an investment for various government projects that are included in the 9 eligible green sectors. This research resulted in the conclusion that the green sukuk that have been issued in Indonesia have contributed to sustainable development goals in accordance with goal 7, goal 8, goal 9, goal 11 and goal 13.

The Impact of Government Sukuk Emissions on Islamic Banking Activities in Indonesia

<p><em>This paper aims to explore the crowding-out effect in the context of Islamic economics. Specifically, has the government's issuance of sukuk resulted in a decrease or even a negative impact on the financing growth of Islamic banks? In order to examine this effect, we use monthly data from all Islamic commercial banks in Indonesia from January 2008 to December 2023. This study employs autoregressive distributed lag (ARDL) for data analysis. The results indicate that the growth in outstanding government sukuk is negatively and significantly related to the financing growth of Islamic banks, especially in the short term. In the long term, the growth in outstanding government sukuk tends not to have a significant effect on banking activities. Therefore, the growth of outstanding government sukuk has directly hampered Islamic economy and banking development.</em></p>

How Financial Risk Affects Indonesia Sovereign Sukuk Market Development

Global bond market attention is starting to witness very interesting developments in the development of Sukuk. However, the academic literature on the determinants of the development of the Sukuk market is still new and very limited. Using the Vector Autoregression (VAR)/Vector Error Correction Model (VECM) method, this study examines how the financial risk component influences the development of the Indonesian sovereign Sukuk market. Data was collected from Bank Indonesia and Indonesia’s Directorate General of Financing and Risk Management on the External Debt Statistics database for ten years from 2013Q1-2023Q1. The results of this study indicate that the foreign Debt Service Ratio (DSR) and Exchange Rate (EXC) significantly affect the development of the sovereign Sukuk Market. The foreign DSR has a negative effect, while the EXC positively affects the development of the sovereign Sukuk market. Meanwhile, the ratio of foreign debt to Gross Domestic Product (GDP) has an insignificant effect on the development of the sovereign Sukuk Market. The findings advocate policymakers in Indonesia on the importance of strengthening financial stability and regulating the issuance of Sukuk in accordance with the associated financial risks to develop the Sukuk market properly.

ANALISIS PROFITABILITAS PERBANKAN SYARIAH DI NEGARA OKI

The development of the economic system can be seen from the movement of the financial system which has a global impact. Therefore, the role of banking is very important for economies around the world. The aim of this research is to assess the financial performance of Islamic banks in OIC member countries (Indonesia, Malaysia, Pakistan, United Arab Emirates and Saudi Arabia) through profitability. The measure of profitability is to use the ROA ratio. The data was processed using panel data regression testing. The results of data analysis show that CAR and sukuk have a significant positive effect on profitability, while BOPO has a significant negative effect on the profitability of sharia banks in OIC member countries during the 2018 - 2022 period. Only the inflation variable has not significantly influenced the profitability of sharia banks in OIC member countries during the period. 2018 – 2022. The implication of this research is that Islamic banks must strive to increase the CAR ratio and reduce the BOPO ratio because it can significantly affect the level of bank profitability. Apart from that, Islamic banks also continue to increase sukuk issuance because it can encourage increased profits.

CONTRIBUTION OF FOREIGN DEBT, SUKUK, AND BONDS IN INDONESIA'S ECONOMIC GROWTH

Introduction: Indonesia's economic growth experiences unstable conditions from year to year, The study explores their impact on Indonesia's inability to overcome government spending problems by comparing three alternative sources of Indonesian state income to support economic growth, namely foreign debt, Sukuk, and bonds. Methods: The research uses a quantitative approach derived from secondary data in the form of time series data. Foreign debt has a negative effect on Indonesia's economic growth, while sukuk and bonds have a positive effect on Indonesia's economic growth. Results: The simultaneous result is 0.948, meaning that the independent variables (foreign debt, Sukuk, and bonds) have an influence and can be explained by 94.8% of Indonesia's economic growth. Meanwhile, the remaining 5.2% is explained by other variables that are not in this research. This indicates that the foreign debt sukuk and bonds variables have a big influence on Indonesia's economic growth in 2016-2023. Conclusion and suggestion: Foreign debt must be controlled properly by the state so that an economic crisis does not occur in Indonesia. Apart from that, the government must increase the issuance of sukuk and bonds to meet the needs of the deficit APBN.

Aktivitas Sukuk Ijarah Rasulullah, Masa Khulafa Ar-Rasyidin Masa Dinasti Umayyah pada Masa Dinasti Abbasiyyah

Sukuk is a long-term security based on sharia issued by the issuer to sharia loan holders, which requires the issuer to pay the sharia loan holder's income in the form of profit sharing/margin/premium and repayment of interest funds at maturity. This statement is the definition of sharia bonds according to the National Sharia Council (DSN) No.32/DSNMUI/IX/2002. In Indonesia, according to the fatwa issued by the National Sharia Council, one of the types of sukuk is ijárah sukuk. Ijárah sukuk is financing that uses the ijárah contract system, or securities containing financial contracts based on sharia principles, which are issued by the issuing corporation, government or other institutions which require the sukuk issuer to pay a certain amount of compensation to the sukuk owner.rent out property and pay off family fixed assets on time. There are three parties involved in the sukuk ijárah contract. These contracts are investment contracts, namely between investors (sukuk holders) and special purpose vehicles (SPV) or collective investment contracts, sale and purchase contracts between SPV/KIK and suppliers or sellers of assets (goods), and lease contracts (ijárah) or sale and purchase contract. purchase between SPV/KIK and company or property tenants. Issuing sukuk in the capital market requires preparation for sukuk issuance.

Islamic capital market support in the Indonesian halal industry development: SWOT analysis

Purpose – This study aims to analyze the strengths, weaknesses, opportunities, and threats as well as strategies for supporting the Islamic capital market in the context of halal industry development in Indonesia. Methodology – This study used a mixed-method approach in the form of a sequential exploratory design with a SWOT analysis technique. Findings – The Indonesian Islamic capital market has strengths in the successful oversubscription of sukuk issuances (both state and corporate) and growth of Islamic educational institutions. However, it has weaknesses owing to limited corporate awareness and public understanding of the market. Opportunities arise from a youthful and educated demographic, whereas challenges involve the complex issuance process and the limited involvement of State-Owned Enterprises (SOEs). Strategic programs such as integration, incentives, value enhancement, and market deepening are recommended to address these aspects and promote the role of the Islamic capital market in the halal industry and Islamic economic development in Indonesia.Implications – This study devises a range of strategic measures aimed at fostering the establishment of a conducive ecosystem that bolsters the Islamic capital market's role in advancing the halal industry and Islamic economy within Indonesia.Originality – Unlike previous research, which failed to comprehensively investigate and analyze SWOT factors, this study successfully examined and assessed these elements. Furthermore, this study goes beyond the analysis by suggesting strategic approaches to bolster the Islamic capital market's role in the development of Indonesia's halal industry.

Does corporate social sustainability influence on business environment? Impact of corporate governance on distance to default of Sukuk issuers in Islamic banks

Malaysia has emerged as a global hub for Sukuk. But on the parallel, the Malaysian sukuk market has undergone many defaults and facing massive competitive pressure. In this scenario, the precautionary tools to mitigate the default risk must be explored. This study analyzed the impact of corporate governance (CG) on corporate social sustainability (CS) and the distance to default of Sukuk issuers (DD) to investigate the mitigating effect of these variables and the mediating role of CS. The results are robust across alternative measures for the variables and robust against different econometric tests. The implication of this study encouraged the inclusion of female directors and their empowerment due to their positive impact on DD and CS.

FINANCIAL AND NON-FINANCIAL FACTORS AFFECTING SUKUK IJARAH RATINGS

This study aims to analyse what affects the rating of sukuk ijarah as seen from financial and non-financial factors. This research is quantitative research using the SPSS application. the sample of this research is companies that issue sukuk ijarah in the 2014-2018 period and are rated by PEFINDO. Indicators of financial factor variables are measured by CR (Current Ratio), ROA (Return on Asset), TATO (Total Asset Turn Over) and DER (Debt to Equity Ratio). While the non-financial factors used are the age of sukuk. The results of this research are financial ratios that affect sukuk ratings are CR and ROA. Where seen from the partial test these two ratios are significant. Meanwhile, if examined simultaneously CR, ROA, TATO, DER and sukuk age on sukuk ratings, the results have a significant effect. This means that all financial ratios and sukuk age simultaneously affect the ijarah sukuk rating.

Examining the impact of zakah and Islamic finance on national economic growth

Purpose – This study aims to analyze the effect of Islamic financial instruments, including social funds zakah, infak, and sadaqah (ZIS), Islamic financing, Sharia stocks, and corporate sukuk, on economic growth.Methodology – This study uses monthly data from 2013 to 2022 to examine the relationship between ZIS distribution, Islamic bank financing, Islamic stock capitalization, corporate sukuk issuance, and economic growth proxied by the production industry index (IPI). The Vector Error Correction Model (VECM) was utilized.Findings – According to the short-term estimation results, sukuk significantly hinders economic growth, whereas only the ZIS variable has a positive and significant impact. Long-term economic growth is positively impacted by the ZIS and Islamic financing variables, negatively impacted by sukuk, and not significantly impacted by Sharia stock. The Impulse Response Function and Variance Decomposition analysis results also demonstrate that the variables of the Islamic financial sector have a shock effect on Indonesia's economic growth, with ZIS funds making up the majority of the contribution and Sharia stocks the least.Implications – This study will help policymakers, industry, and academia accelerate the Islamic finance sector in Indonesia and strengthen its role in supporting and advancing Indonesia's economic recovery.Originality – Islamic finance, commonly known as Islamic banking–extends beyond Indonesian banks. Non-bank Islamic institutions, including capital markets and social finance, play a vital role in optimizing Islamic financial instruments for national economic growth.