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

Uddin, MH; Kabir, SH; Hossain, MS; Wahab, NSA; Liu, JL

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.

Citation

Uddin, M., Kabir, S., Hossain, M., Wahab, N., & Liu, J. (2020). Which firms do prefer Islamic debt? An analysis and evidence from global sukuk and bonds issuing firms. Emerging Markets Review, 44, 100712. https://doi.org/10.1016/j.ememar.2020.100712

• Journal Article Type: Article
• Acceptance Date: Jun 4, 2020
• Online Publication Date: Jun 7, 2020
• Publication Date: Sep 1, 2020
• Deposit Date: Sep 7, 2020
• Journal: Emerging Markets Review
• Print ISSN: 1566-0141
• Publisher: Elsevier
• Volume: 44
• Pages: 100712
• DOI: https://doi.org/10.1016/j.ememar.2020.100712
• Publisher URL: https://doi.org/10.1016/j.ememar.2020.100712
• Related Public URLs: https://www.journals.elsevier.com/emerging-markets-review/
• Additional Information: Additional Information : ** Article version: AM ** Embargo end date: 31-12-9999 ** From Elsevier via Jisc Publications Router ** Licence for AM version of this article: This article is under embargo with an end date yet to be finalised. **Journal IDs: issn 15660141 **History: issue date 07-06-2020; accepted 04-06-2020