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

 
Author/Editor: Christophe Godlewski ; Rima Turk Ariss ; Laurent Weill
 
Publication Date: August 11, 2014
 
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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.
 
Series: Working Paper No. 14/147
Subject(s): Financial instruments | Bond issues | External financing | Bonds | Stock markets | Islamic banking

 
English
Publication Date: August 11, 2014
ISBN/ISSN: 9781498398794/1018-5941 Format: Paper
Stock No: WPIEA2014147 Pages: 25
Price:
US$18.00 (Academic Rate:
US$18.00 )
 
 
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