Determinants of Sukuk Market Development: Macroeconomic Stability and Institutional Approach

  • BASYARIAH, Nuhbatul (Islamic Economics Doctoral Program, Universitas Islam Negeri (UIN) Sunan Kalijaga Yogyakarta) ;
  • KUSUMA, Hadri (Faculty of Business and Economics, Universitas Islam Indonesia) ;
  • QIZAM, Ibnu (Faculty of Economics and Business, Universitas Islam Negeri (UIN) Syarif Hidayatullah)
  • Received : 2020.11.05
  • Accepted : 2021.01.08
  • Published : 2021.02.28


This study aims to analyze the determinants of macroeconomic and institutional stability on the development of the global sukuk market by controlling the effects of population. This study uses panel data namely GDP per-capita, exchange rate, and inflation as the proxies for macroeconomic stability sourced from the World Development Index, and six dimensions of Worldwide Governance Indicators (WGI) as institutional proxies sourced from WGI-World Bank. To make robust the relationship between macroeconomics and institutional on the global sukuk market, the population (POP) variable was included as a control variable. The development of sukuk uses a proxy for sukuk issuance in the International Islamic Financial Market, for the annual period from 2002-2017. The data was analyzed using the General Method of Moment, and the results show that by controlling the population effects that proved to be significant, GDP per-capita and the rule of law have a significant impact on the development of sukuk, especially when incorporating population effects as control variables, whereby further ascertaining the effect of each macroeconomic-stability variable and institutional stability on sukuk development, especially inflation, found not to affect sukuk development. These results also confirm the previous findings, whereby inflation remains controllable at a certain level for economic development.


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