Are Islamic bonds different from conventional bonds? International evidence from capital market tests

Nafis Alam, M. Kabir Hassan and Mohammad Aminul Haque

Borsa Istanbul Review, 2013, vol. 13, issue 3, 22-29

Abstract: Islamic bonds (Sukuk) emerged as an innovative capital market instrument over the last decade. This paper investigates the impact of conventional bonds and Sukuk announcement on shareholder wealth and their determinants using 79 Sukuks and 87 conventional bonds over the period of 2004e2012 in six developed Islamic financial market. The overall time frame is divided into three parts, 2004e2006 (before crisis); 2007e2009 (during crisis) and 2010e2012 (after crisis). It is revealed that the market reaction is negative for the announcements of Sukuk before and during 2007 global financial crisis. On the other hand market reaction is positive for announcement of conventional bond before the crisis period and negative during and after crisis periods. The size of bond offering appears to have a negative impact on the cumulative abnormal return in case of Sukuk and positive in case of conventional bond.

Keywords: Sukuk; Abnormal return; Capital structure (search for similar items in EconPapers)
JEL-codes: G14 G31 G32 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (44)

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Persistent link: https://EconPapers.repec.org/RePEc:bor:bistre:v:13:y:2013:i:3:p:22-29

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