| Abstract: |
Sukuk are considered to be hybrid bonds; they can be splited into two main
features of stocks and bonds. They are similar to stocks, they precise the
type of partnerships and owners of Sukuk for a specific asset or project for
finance, in which the Sukuk have been issued. In this paper we will discuss
the main different features between the Sukuk and conventional bonds by
conducting an appropriate econometric model. Sukuk are new assets in the
islamic finance and they are fastly growing in the market, especially with
people who follow shari'a law, as they aim to find an asset such as
conventional bonds. The paper will use a multiple regression model to see how
major macroeconomics variables affect the performance of the Sukuk market and
the bonds market. So, we gathered the data for all variables over a period of
10 years between (2008-2018) .As a conclusion, the bonds and Sukuk are
affected by different variables, Sukuk are most issued in the real estate
field, which is not the case for the bonds. Then, Stock market is positively
correlated with Sukuk and negatively correlated for the bonds. Sukuk, often
regarded as hybrid bonds, embody a unique blend of stock and bond
characteristics, delineating specific partnerships and ownership structures
for financing particular assets or projects, aligning with the principles of
Islamic finance. This paper aims to elucidate the distinctions between Sukuk
and conventional bonds, shedding light on their burgeoning presence within the
financial landscape, particularly among adherents of Sharia law seeking
Sharia-compliant alternatives akin to conventional bonds. Employing a multiple
regression model, we endeavor to analyze the influence of key macroeconomic
variables on the performance of both Sukuk and bond markets. Our dataset spans
a decade from 2008 to 2018, facilitating a comprehensive examination of market
dynamics. In this study, we adopt a post-positivist epistemological
perspective, recognizing the partial and conditional nature of knowledge while
valuing the importance of observable facts. Utilizing a hypothetico-deductive
approach, we formulated hypotheses regarding the relationship between key
macroeconomic variables and the performance of sukuk and bond markets.
Multiple regression analysis is employed to test these hypotheses and
ascertain the significant impact of the variables on market performance. Our
analysis reveals distinct differences between sukuk and conventional bonds in
terms of issuance patterns and correlations with macroeconomic variables.
Sukuk issuance is primarily concentrated in the real estate sector, reflecting
its unique position within Islamic finance. Notably, Sukuk issuance
predominantly gravitates towards the real estate sector, a departure from
conventional bond practices. Additionally, we observe a positive correlation
between the stock market and Sukuk performance, in contrast to the negative
correlation observed with conventional bonds |