A qualitative analysis on the determinants of legitimacy ofsukuk

Essia Ries Ahmed, Md Aminul Islam, Tariq Tawfeeq Yousif Alabdullah and Azlan Bin Amran

Journal of Islamic Accounting and Business Research, 2019, vol. 10, issue 3, 342-368

Abstract: Purpose - This paper aims to investigate the influence of the determinants (pricing, type of structure,Shariahauditing,Shariahrisk andShariahdocumentation) and thesukuklegitimacy among Islamic financial institutions using a qualitative approach. The paper further explained the significance of the determinants on legitimacy, evaluated the relationship betweensukukcharacteristics andsukuklegitimacy and examined the moderating effect ofShariahSupervisory Board (SSB) on the relationship. Design/methodology/approach - The study used a purposive sampling technique to select the target respondents required for the survey (semi-structured interview). This technique is applied by selecting members of SSBs among Islamic financial institutions. A total number of ten members are selected as the sample size for the study based on their experience and basic knowledge of Fiqh Al-Mua’malat and its application in Islamic financial institutions. Findings - The findings revealed that the determinants have a significant impact on thesukuklegitimacy, meaning that there is a positive and significant relationship between the determinants and thesukuklegitimacy. In addition, this study indicates the empirical evidence of the moderating effect of SSB on the relationship between the determinants and thesukuklegitimacy. Practical implications - This study has added to the literature by examining the determinants ofsukuklegitimacy while evaluating the moderating effect of SSB on the relationship. Besides, this might add benefits to the numerous Islamic financial institutions relating to the amendment of its regulatory frameworks with the view to pushing thesukukmarket investors to move toward asset-backed structure. In addition, the SSB in central banks must also focus its attention regarding thesukuklegitimacy and its application among the various Islamic financial institutions. Originality/value - This study has added a new discussion to the body of knowledge, i.e. examining thesukuklegitimacy and its relationship withsukukdeterminants; hence, an approach that is not widely discussed in the previous studies. Furthermore, conducting such research in the field of Islamic finance provides novelty in the literature among both emerging and developed economies including Malaysia. This is because to the best knowledge of the researchers, there was no empirical study (within the literature) that combined these variables and evaluated their empirical significance. Accordingly, this would enlighten the Islamic Ummah and propel the society’s intensity toward contributing to knowledge and might further provide clarification on the determinants and thesukuklegitimacy to prospective scholars, precisely on the moderating effect of SSB on the relationship between determinants and legitimacy ofsukuk.

Keywords: Determinants; Moderating; Shariah Supervisory Board; Sukuk legitimacy (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jiabrp:jiabr-01-2016-0005

DOI: 10.1108/JIABR-01-2016-0005

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