Do the Type of Sukuk and Choice of Shari'a Scholar Matter?

By Christophe Godlewski, Rima A Turk, Laurent Weill

August 11, 2014

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Christophe Godlewski, Rima A Turk, and Laurent Weill. Do the Type of Sukuk and Choice of Shari'a Scholar Matter?, (USA: International Monetary Fund, 2014) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Sukuk, the shari’a-compliant alternative mode of financing to conventional bonds, have expanded considerably over the last decade. We analyze the stock market reaction to two key features of this financial instrument: sukuk type and characteristics of the shari’a scholar certifying the issue. We use the event study methodology to measure abnormal returns for a sample of 131 sukuk from eight countries over the period 2006-2013 and find that Ijara sukuk structures exert a positive influence on the stock price of the issuing firm. We observe a similar positive impact from shari’a scholar reputation and proximity to issuer. Overall our results support the hypotheses that the type of sukuk and the choice of scholars hired to certify these securities matter for the market valuation of the issuing company.

Subject: Financial instruments, Financial markets, Stock markets

Keywords: Certificate value, Event study, Financial Istruments, Global, Information asymmetry, Islamic Finance, Issuer country, Issuing company, Market index, Market valuation, Scholar characteristics matter, Scholar-issuer relationship, Shari’a Scholars, Stock markets, WP

Publication Details

Pages:

25
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2014/147
Stock No:

WPIEA2014147
ISBN:

9781498398794
ISSN:

1018-5941

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