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What Determines: Sukuk: Issuance Type in Indonesia?

Datien Eriska Utami, Irwan Trinugroho and Bruno S. Sergi

A chapter in Asia-Pacific Contemporary Finance and Development, 2019, vol. 26, pp 195-206 from Emerald Publishing Ltd

Abstract: Abstract We empirically investigate the determinants of sukuk issuance type in Indonesia to issue either ijarah sukuk or mudharabah sukuk. We include sukuk characteristics, sharia-related factors, and firm characteristics, provide empirical evidence on the determinants of sukuk issuance type by incorporating sukuk-specific factors, firm-specific factors, and sharia compliance variables, and address the role of Sharia Supervisory Board, as the sharia representative of firm compliance for sharia products, in the issuer’s choice of sukuk type. By studying 88 sukuk issuance in Indonesia from 2009 to 2017, we find that firm profitability and the sharia compliance level have a significant effect on the probability of issuing mudharabah sukuk. Some other factors’ characteristics including sukuk yield, firm age, and inflation rate are also found to have a significant effect.

Keywords: Sukuk; Ijarah; Mudharabah; sharia supervisory board; profitability; yield; Indonesia; G15; G23 (search for similar items in EconPapers)
Date: 2019
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