Determinants of Sukuk Issuance

Sukuk is an Islamic security, which is very similar to trust certificate with proportional or undivided interest in an asset or a pool of assets. Sukuk market is an active and large part of Islamic finance, which drives rebound of industry. Despite similarity to bond sukuk is a very different debt instrument. Sukuk features are being investigated by many economists. Determinants of sukuk issuance is one of the interesting part of this research field. Despite there are many studies considered the question they seem to have potential for further development. The current paper investigates factors influencing sukuk issuers. To accomplish this task LASSO logistic regression and Boosting classification tree are applied. Data used in this research cover different countries with developed Islamic finance. Data was collected for period from 2014 to 2019. As a result, this research concludes that participation sukuk issuers follow trade-off debt theory. Variables appeared to explain sukuk issuance are EBITDA profitability, Return on Assets and Assets tangibility. Models constructed in the paper unanimously claim that increase of profitability and assets tangibility positively drive sukuk issuance. The first effect is fully due to trade-off theory while for the second factor impact of this concept is also reinforced by Sharia influence.