Arrangers’ Identity and the Syndicate Structure of Sukuk (Identiti Pengatur dan Struktur Sindiket Sukuk)

Halim, Zairihan Abdul and Zakaria, Nadisah and Zakaria, Roza Hazli and Hazman, Samsudin (2018) Arrangers’ Identity and the Syndicate Structure of Sukuk (Identiti Pengatur dan Struktur Sindiket Sukuk). Jurnal Ekonomi Malaysia, 52 (1). pp. 243-256. ISSN 0126-1962

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Official URL: https://doi.org/10.17576/JEM-2018-5201-20

Abstract

The participation of multiple banks and financial institutions in a sukuk (Islamic bonds) issuance reflects a successful process of negotiation of contract terms between the issuer, lead arranger, and other financial institutions. Conventional finance literature suggests that certain banks or non-bank institutions possess unique characteristics that give them a competitive advantage in screening and monitoring debt contracts. Whether or not their uniqueness contributes to the structure of sukuk syndicate is still an empirical question. Therefore, this paper examines the relation between arranger identity and the structure of sukuk syndicate for a sample of 3,462 sukuk tranches. Results of multiple Poisson regressions indicate the certification effect of arrangers where more reputable banks are associated with a larger syndicate size (the number of participant financial institutions). Non-bank institutions are also positively related to the size of syndicate, and this relation is more pronounced for private firms. This implies that such institutions are gaining specialization in screening and monitoring risky contracts. Further, Islamic financial institutions (IFIs) play a limited role in sukuk syndication. One promising avenue for IFIs to build their capacity to assume the role of lead arranger, as the results suggest, is to actively engage reputable conventional banks and non-bank institutions in their syndicated financing activities.

Item Type: Article
Uncontrolled Keywords: Syndication; Islamic bond; arranger identity; certification effect
Subjects: B Philosophy. Psychology. Religion > BP Islam. Bahaism. Theosophy, etc
H Social Sciences > HG Finance
Divisions: Faculty of Economics & Administration
Depositing User: Ms. Juhaida Abd Rahim
Date Deposited: 20 Aug 2019 04:03
Last Modified: 20 Aug 2019 04:03
URI: http://eprints.um.edu.my/id/eprint/21971

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