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Do debt markets price sukuk and conventional bonds differently?

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dc.contributor.authorSafari, Meysam
dc.contributor.authorAriff, Mohamed
dc.contributor.authorShamsher Mohamad Ramadili Mohd
dc.date.accessioned2016-06-06
dc.date.accessioned2016-07-25T20:05:45Z
dc.date.available2016-06-06
dc.date.available2016-07-25T20:05:45Z
dc.date.disclosure2016-06-10
dc.date.issued2013
dc.description.abstractA new type of debt securities called sukuk certificates have grown to US $840 billion in 11 financial markets as of 2011. These Islamic debt instruments share some features similar to conventional bonds, so market operators treat both as bonds. Whether it is appropriate to treat sukuk certificates as conventional bonds is empirically tested in this paper. If the yields of sukuk are the same as those of conventional bonds, Granger causality tests could confirm their equivalence. Practically the tests show otherwise. Also, the yields of sukuk instruments are significantly higher than yields of conventional bonds even after controlling issuers, rating quality and tenure in matched samples tests. Finally, sukuk issuance affects the issuing firm's beta risk significantly, which is consistent with capital structure theory. These new findings on the 10-year old Islamic debt market have regulatory and market making policy implications as to whether sukuk instruments should be classed as a new class of financial instruments, and not as bonds. Future research and market practices have to re-investigate a number of issues anew because sukuk market is for a different class of debt
dc.identifier.citationSafari, Meysam and Ariff, Mohamed and Ramadili Mohd, Shamsher Mohamad. (2013). Do debt markets price sukuk and conventional bonds differently? Journal of King Abdulaziz University Islamic Economies, 26 (2), pp. 133-149.
dc.identifier.urihttps://ikr.inceif.edu.my/handle/INCEIF/1404
dc.languageEnglish
dc.language.isoen
dc.publisherSocial Science Electronic Publishing
dc.rights2013. Social Science Electronic Publishing
dc.sourceCRP
dc.subjectSukuk
dc.subjectBond
dc.subjectYield curve
dc.subjectYield to maturity
dc.subjectIslamic finance
dc.subjectIslamic bond
dc.subjectFixed income finance
dc.subjectSecuritization
dc.subjectYield spread
dc.titleDo debt markets price sukuk and conventional bonds differently?
dc.typeJournal Article
dlc.maintopicIslamic capital markets
dlc.subtopicEconomics
dspace.entity.typePublication
ikr.doctypeScholarly Works
ikr.topic.maintopicIslamic capital markets
ikr.topic.subtopicIslamic capital markets
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relation.isAuthorOfPublication33b91dde-0170-454c-8f2b-ec4b208837b9
relation.isAuthorOfPublication33b91dde-0170-454c-8f2b-ec4b208837b9
relation.isAuthorOfPublication.latestForDiscovery33b91dde-0170-454c-8f2b-ec4b208837b9
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