The Effectiveness Of Sukuk (islamic Bonds) Financing On The Financial Stability Of Islamic Banks
Résumé: This paper aims to investigate empirically the impact of Sukuk (Islamic bonds) financing on the financial stability of Islamic banking in Malaysia. This paper applied bootstrap quantile regression as an optimal estimation approach to investigate the impact of Sukuk financing on the financial stability of Islamic banking in Malaysia spanning from 2013Q4 to 2019Q3. Sukuk financing was proxied by the total issued Sukuk holdings, while the financial stability of Islamic banking was calculated by the Z-score formula. The sample covered all full-fledged Islamic financial institutions in Malaysia. The findings demonstrated that Sukuk financing is enhancing the financial stability of Islamic banking in Malaysia which reflects the significant role of the Islamic financial markets of Sukuk as a vital contributor to financial stability. This paper would fill the literature by investigating the role of Sukuk financing on the financial stability of Islamic banking in Malaysia as a successful experiment, as the outcome of this paper serves as a guide for financial researchers, decision-makers, and policymakers to improve the Sukuk market globally as an alternative financing source for the best contribution to the financial stability of Islamic banking and the economic stability.
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