Societal trust and Sukuk activity

Author First name, Last name, Institution

Saqib Aziz, Rennes School of Business
Dawood Ashraf, Islamic Development Bank
Rwan El-Khatib, Zayed University

Document Type

Article

Source of Publication

Journal of International Financial Markets Institutions and Money

Publication Date

9-1-2021

Abstract

Sukuk investments require investors and issuers to adhere to subtle moral and ethical standards beyond following mere profit maximization objectives. Investor trust manifested through the level of societal trust could be vital in the global Sukuk investment surge. This study investigates the relationship between the societal trust level and Sukuk activity. It employs a global sample of Sukuk issuances spanning over 2001–2019 and finds that a country’s societal trust level significantly and positively influences the amount of Sukuk issued. Moreover, this positive effect supersedes the negative effects of higher information asymmetry associated with equity-based Sukuk or Sukuk issued by risky firms. Ultimately, trust is both a deterrent and critical for Islamic finance success.

DOI Link

10.1016/j.intfin.2021.101384

ISSN

1042-4431

Publisher

Elsevier

Volume

74

Disciplines

Business

Keywords

Trust, Sukuk, Islamic finance, Information asymmetry, Culture

Scopus ID

85110596841

Recommended Citation

Aziz, Saqib; Ashraf, Dawood; and El-Khatib, Rwan, "Societal trust and Sukuk activity" (2021). All Works. 4389.
https://zuscholars.zu.ac.ae/works/4389

Indexed in Scopus

yes

Open Access

no