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Determinants of International Sukuk Issuance and Capacity Estimation for Iranian Financial Market

Author

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  • Mohammadi , Shapoor

    (University of Tehran)

  • Tehrani , Reza

    (University of Tehran)

  • Khansari , Rasool

    (University of Tehran)

Abstract

The Sukuk market has become the fastest growing segment of the Islamic financial services industry. Governments and other corporate entities have started tapping the local and international Sukuk markets in order to raise the required funds. The investor base is also expanding and Sukuk has now become a popular and obvious choice for retail investors in a number of jurisdictions. However, because of lack of suitable market conditions and some cross-border restrictions, the international Sukuk market is not developed enough in Iran. Using international Sukuk issuance data for 2001-2015, this study investigates the determinants of international Sukuk issuance and the capacity of issuing such securities in Iranian financial market. We use ANOVA analysis and PCA to explore main factors. Using the data of 34 indicators for 21 countries that have issued international Sukuk, we found that the main determinants of international Sukuk issuance are the ratios of bank deposits to GDP (%), Stock market capitalization to GDP (%), International debt issues to GDP (%) and outstanding international public debt securities to GDP (%). After determination of the basic factors for the countries, using the discriminant model, we estimated the Iranian financial market's capacity for issuing international Sukuk.

Suggested Citation

  • Mohammadi , Shapoor & Tehrani , Reza & Khansari , Rasool, 2015. "Determinants of International Sukuk Issuance and Capacity Estimation for Iranian Financial Market," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 10(3), pages 1-28, July.
    • Handle: RePEc:mbr:jmonec:v:10:y:2015:i:3:p:1-28
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    References listed on IDEAS

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    More about this item

    Keywords

    Islamic Fianance; International Sukuk; Sukuk Issuance; Iranian Financial Market;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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