The (little) difference that makes all the difference between Islamic and conventional bonds

Saad Azmat, Michael Skully and Kym Brown

Pacific-Basin Finance Journal, 2017, vol. 42, issue C, 46-59

Abstract: This paper examines whether conventional bond ratings determinants can be similarly applied to Islamic bonds (sukuk) or if the specific Islamic features impact their credit ratings. We incorporate Islamic bond features as well as these conventional credit risk measures into the bond credit ratings model of Blume, Lim and MacKinlay (1998). We then test the model on a sample of Malaysian Islamic bonds. Our results confirm that conventional firm characteristics such as debt and size likewise drive Islamic credit ratings. Islamic bond characteristics such as the type of religious (Shariah) advisor, the regulatory changes by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and the bond issuer's industry also influence their ratings. We also find that Islamic bonds were insulated from financial shocks in the conventional financial markets in 2008.

Keywords: Islamic bonds; Sukuk; Bond credit ratings (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927538X15300329
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:42:y:2017:i:c:p:46-59

DOI: 10.1016/j.pacfin.2015.12.010

Access Statistics for this article

Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee

More articles in Pacific-Basin Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().