Sukūk development and income inequality
| Author | Wahyu, Jatmiko |
| Author | Ebrahim, M. Shahid |
| Author | Smaoui, Houcem |
| Available date | 2024-09-25T05:34:48Z |
| Publication Date | 2023-10-31 |
| Publication Name | Journal of International Financial Markets, Institutions and Money |
| Identifier | http://dx.doi.org/10.1016/j.intfin.2023.101852 |
| ISSN | 10424431 |
| Abstract | This paper investigates the link between sukūk development and income inequality by scrutinizing twenty-two countries’ data from 1995 to 2019. We employ the two-stage Fractional Regression Model to illustrate that sukūk issuance is associated with increased income disparity. This result is attributed to the sukūk design ignoring credit market frictions. This rationalizes the sukūk-inequality nexus in light of the ethical objectives of Islamic law. We argue that reinforcing property rights by mitigating the ill effects of excessive risk-taking (i.e., gharar) and endemic agency costs of debt (i.e., ribā) in our ethical framework can improve sukūk’s role in socio-economic development. |
| Sponsor | The authors thank Habib Ahmed, Obiyathulla Bacha, Zaäfri Husodo, Vasileios Pappas, Francesco Vallascas, participants of the 2022 International Society for the Advancement of Financial Economics (ISAFE-2022 Vietnam) and Paris Financial Management Conference (PFMC-2022) for their valuable comments and feedback on the previous versions of this paper. We also appreciate the constructive suggestions of the Editor (Jonathan A. Batten) and two anonymous Referees. |
| Language | en |
| Publisher | Elsevier |
| Subject | Sukūk Income inequality Islamic finance Financial development Socio-economic development |
| Type | Article |
| Volume Number | 88 |
| Open Access user License | http://creativecommons.org/licenses/by-nc/4.0/ |
| ESSN | 1873-0612 |
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