Sukuk liquidity and creditworthiness during COVID-19

Document Type

Article

Source of Publication

The Quarterly Review of Economics and Finance

Publication Date

4-1-2024

Abstract

This paper presents the empirical liquidity study of Islamic fixed-income securities during 2020-2021. Using bid-ask and Z-spread metrics we demonstrate that the apogee of both, liquidity and credit stresses in international sukuk market is reached in early April 2020. Contrasting results for non-Islamic fixed-income instruments, we show that sukuk credit spreads recover to pre-Covid levels faster than their bid-ask spreads. However, we find that the share of liquidity component in the yield spread of sukuks always remains below 1%, revealing that Covid-19 does not worsen in relative terms the economic attractiveness of this financing channel for Shariah-concerned entities and investors.

ISSN

1062-4259

Publisher

Elsevier BV

Volume

94

First Page

88

Last Page

92

Disciplines

Business

Keywords

Islamic fixed-income securities, liquidity study, Covid-19, credit spreads, bid-ask spreads

Indexed in Scopus

no

Open Access

yes

Open Access Type

Hybrid: This publication is openly available in a subscription-based journal/series

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