Impact of Economic Factors to Determine the Sukuk Market Development An Empirical Analysis

Abstract

The present paper examined the causes of Economic Factors influencing the Development of
Sukuk Structure.. The scope of our study covers the most Sukuk Issuers’ countries namely:
UAE, Malaysia, Saudi Arabia, Kuwait, Qatar, Bahrain, Indonesia, Brunei, Pakistan and
Gambia. This study has analyzed the influence of: (1) Economic factors (2) Global financial
Crisis (3) Financial System (4) Institutional Environment (5) Legal Origin (6) Religion and
Society Factors on the Development of the Sukuk Market. The study showed that Economic
factors such GDP per capita; trade openness, economic size and percentage of Muslims, have
a positive influence on the growth of the Sukuk market. Financial crisis has a major negative
effect on the development of the Sukuk market since the amount of Sukuk issued in those
years has declined significantly. Regulatory quality has a major effect on the development of
Sukuk market. This implies that countries ranking higher in regulation quality have a larger
Sukuk market. This can be interpreted as reliability and efficiency of regulations.