Which firms do prefer Islamic debt? An analysis and evidence from global sukuk and bonds issuing firms

Md Hamid Uddin; Sarkar Kabir; Mohammed Hossain; Nor Wahab; Jia Liu

doi:10.1016/j.ememar.2020.100712

Which firms do prefer Islamic debt? An analysis and evidence from global sukuk and bonds issuing firms

Md Hamid Uddin, Sarkar Kabir, Mohammed Hossain, Nor Wahab, Jia Liu

School of Economics, Finance and Accounting

Research output: Contribution to journal › Article › peer-review

5 Citations (Scopus)

163 Downloads (Pure)

Abstract

The Islamic debt instrument sukuk has been in the market for two decades; still, we do not know why a firm prefers an Islamic debt over conventional debt, set aside religiosity issue. We argue there is a genuine reason to choose Islamic debt because it has lighter indebtedness, benefits of avoiding external monitoring, and tax incentives. Based on the cross-country data for 346 firms issuing dollar-denominated global sukuk and bonds, we find that firms that prefer Islamic debt and issue sukuk are financially more unstable, and thus exposing to higher insolvency risk as compared to bond issuing firms.

Original language	English
Article number	100712
Pages (from-to)	(In-Press)
Journal	Emerging Markets Review
Volume	44
Early online date	7 Jun 2020
DOIs	https://doi.org/10.1016/j.ememar.2020.100712
Publication status	Published - Sep 2020

Bibliographical note

NOTICE: this is the author’s version of a work that was accepted for publication in Emerging Markets Review. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Emerging Markets Review, 44 (2020) DOI:10.1016/j.ememar.2020.100712

© 2020, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/

Keywords

Bond
Debt market barrier
Insolvency risk
Islamic debt
Sukuk

ASJC Scopus subject areas

Business and International Management
Economics and Econometrics

Access to Document

10.1016/j.ememar.2020.100712

Post-PrintAccepted author manuscript, 1.12 MBLicence: CC BY-NC-ND

Cite this

@article{ce4e3a74a35c4abfb41810993eb37e6a,

title = "Which firms do prefer Islamic debt? An analysis and evidence from global sukuk and bonds issuing firms",

abstract = "The Islamic debt instrument sukuk has been in the market for two decades; still, we do not know why a firm prefers an Islamic debt over conventional debt, set aside religiosity issue. We argue there is a genuine reason to choose Islamic debt because it has lighter indebtedness, benefits of avoiding external monitoring, and tax incentives. Based on the cross-country data for 346 firms issuing dollar-denominated global sukuk and bonds, we find that firms that prefer Islamic debt and issue sukuk are financially more unstable, and thus exposing to higher insolvency risk as compared to bond issuing firms.",

keywords = "Bond, Debt market barrier, Insolvency risk, Islamic debt, Sukuk",

author = "Uddin, {Md Hamid} and Sarkar Kabir and Mohammed Hossain and Nor Wahab and Jia Liu",

note = "NOTICE: this is the author{\textquoteright}s version of a work that was accepted for publication in Emerging Markets Review. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Emerging Markets Review, 44 (2020) DOI:10.1016/j.ememar.2020.100712 {\textcopyright} 2020, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/ ",

year = "2020",

month = sep,

doi = "10.1016/j.ememar.2020.100712",

language = "English",

volume = "44",

pages = "(In--Press)",

journal = "Emerging Markets Review",

issn = "1566-0141",

publisher = "Elsevier",

}

TY - JOUR

T1 - Which firms do prefer Islamic debt? An analysis and evidence from global sukuk and bonds issuing firms

AU - Uddin, Md Hamid

AU - Kabir, Sarkar

AU - Hossain, Mohammed

AU - Wahab, Nor

AU - Liu, Jia

N1 - NOTICE: this is the author’s version of a work that was accepted for publication in Emerging Markets Review. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Emerging Markets Review, 44 (2020) DOI:10.1016/j.ememar.2020.100712 © 2020, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/

PY - 2020/9

Y1 - 2020/9

N2 - The Islamic debt instrument sukuk has been in the market for two decades; still, we do not know why a firm prefers an Islamic debt over conventional debt, set aside religiosity issue. We argue there is a genuine reason to choose Islamic debt because it has lighter indebtedness, benefits of avoiding external monitoring, and tax incentives. Based on the cross-country data for 346 firms issuing dollar-denominated global sukuk and bonds, we find that firms that prefer Islamic debt and issue sukuk are financially more unstable, and thus exposing to higher insolvency risk as compared to bond issuing firms.

AB - The Islamic debt instrument sukuk has been in the market for two decades; still, we do not know why a firm prefers an Islamic debt over conventional debt, set aside religiosity issue. We argue there is a genuine reason to choose Islamic debt because it has lighter indebtedness, benefits of avoiding external monitoring, and tax incentives. Based on the cross-country data for 346 firms issuing dollar-denominated global sukuk and bonds, we find that firms that prefer Islamic debt and issue sukuk are financially more unstable, and thus exposing to higher insolvency risk as compared to bond issuing firms.

KW - Bond

KW - Debt market barrier

KW - Insolvency risk

KW - Islamic debt

KW - Sukuk

UR - http://www.scopus.com/inward/record.url?scp=85087023748&partnerID=8YFLogxK

U2 - 10.1016/j.ememar.2020.100712

DO - 10.1016/j.ememar.2020.100712

M3 - Article

VL - 44

SP - (In-Press)

JO - Emerging Markets Review

JF - Emerging Markets Review

SN - 1566-0141

M1 - 100712

ER -

Which firms do prefer Islamic debt? An analysis and evidence from global sukuk and bonds issuing firms

Abstract

Bibliographical note

Keywords

ASJC Scopus subject areas

Access to Document

Other files and links

Fingerprint

Kabir Kabir

Cite this

Which firms do prefer Islamic debt? An analysis and evidence from global sukuk and bonds issuing firms

Abstract

Bibliographical note

Keywords

ASJC Scopus subject areas

Access to Document

Other files and links

Fingerprint

Profiles

Kabir Kabir

Cite this