The Role of the Financial and Macroeconomy Industry on the Development of the Sukuk (Sharia Compliant Bonds) Market: The Case of Indonesia

Abstract

The purpose of this study is to empirically determine whether the banking sector, bond market and conventional stock market as well as macroeconomic variables can influence the development of the Sukuk (Sharia Compliant Bonds) market in Indonesia. This study uses secondary data taken from the Indonesian Stock Exchange, OJK and the Indonesian Statistics Agency. The data used is monthly data from January 2014 to December 2018 which includes the outstanding value of Sharia Compliant Bonds, outstanding bonds value, stock capitalization value and macro variable data in the form of GDP data and export-import trade data. Based on the results of data analysis, it shows that the variables of all financial investment variables, namely the banking sector, the bond market and stocks have a positive effect on the development of the Sharia Compliant Bonds market. in Indonesia, while for the macroeconomic variables only the GDP variable affects the development of the Sharia Compliant Bonds market in Indonesia. The trade-to-foreign ratio variable has no effect on the development of the Sharia Compliant Bonds market in Indonesia.

Received: 4 March 2021 / Accepted: 6 May 2021 / Published: 8 July 2021