Connectedness of Maturity Period and Zakat Investment Oblige to Sukuk (Islamic Bonds) Value Issuance

Noriza Mohd Saad, Zulkifli Mohamed and Dila Sharina Yusri
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Noriza Mohd Saad: Faculty of Business & Management, University Technology Mara (UiTM) Kelantan, Malaysia.
Zulkifli Mohamed: Faculty of Business & Management, University Technology Mara (UiTM) Kelantan, Malaysia.
Dila Sharina Yusri: Graduate Research Assistance (GRA) University Technology Mara (UiTM) Kelantan, Malaysia

International Journal of Research and Innovation in Social Science, 2025, vol. 9, issue 6, 3289-3303

Abstract: Firms, public or private and even governments are sometimes faced with the problem of scarcity of funds to finance economic activities for industry investment sectors/ projects. The main sources of long-term funding preferable by issuer firms are mainly through debt (bonds) and equity issuance either in conventional or Islamic instruments. Listed companies under main market in Bursa Malaysia that belong to shariah compliant securities firms, they are normally prefer to issue sukuk as compared to conventional bonds concerning on zakat investment obligations for profitable projects at maturity date. Thus, the objective of this study is to investigate the relationship between sukuk tenure and zakat investment towards sukuk issuance influenced by systematic risk factors. Secondary data are utilized cover from year 2000 to 2023 for 2840 number of observations. Results from regression tests reported that maturity date or tenure of sukuk have a significant positive relationship towards its issuance in all equation model regressions for fixed effect, random effect and robust effect model. However, zakat investment shows a significant only in random effect model justifying that this wealth contribution paid for profitable investment/ project at specified date. All systematic risk factors show a significant effect towards sukuk issuance with mixed positive and negative associations except for interest rate spread. Thus, to encourage sukuk issuance by companies or government, an adoption by introducing sector-specific incentives, such as regulatory relief, tax exemptions, and government-backed guarantees is timely needed since it can reduce the cost of sukuk issuance.

Date: 2025
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