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

Research output: Contribution to journalArticle

1 Citation (Scopus)

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 languageEnglish
Article number100712
Pages (from-to)(In-Press)
JournalEmerging Markets Review
Volume44
Early online date7 Jun 2020
DOIs
Publication statusPublished - Sep 2020

Keywords

  • Bond
  • Debt market barrier
  • Insolvency risk
  • Islamic debt
  • Sukuk

ASJC Scopus subject areas

  • Business and International Management
  • Economics and Econometrics

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