This study investigates how macroeconomic, financial sector and regulatory conditions influence corporate sukuk issuance in selected Organisation of Islamic Cooperation (OIC) countries, particularly focusing on the disruptions caused by the COVID-19 pandemic.
Secondary annual panel data covering corporate sukuk issuance in selected OIC countries from 2015 to 2024 were sourced from LSEG Refinitiv, Fitch Connect, IMF and WFE databases. A two-step empirical strategy is adopted: the least squares dummy variable corrected (LSDVC) estimator controls for dynamic bias, while instrumental variable quantile regression (IVQR) uncovers heterogeneity across the issuance distribution and addresses endogeneity. Banking credit is decomposed into conventional and Islamic components, and COVID 19 dummy and post-COVID dummies isolate crisis and post-crisis effects.
Bank credit complements sukuk issuance, most strongly at lower quantiles where markets are nascent. Equity-market depth peaks at the median quantile, indicating an ecosystem effect at intermediate market maturities that tapers in the most developed jurisdictions. Islamic banking assets substitute for sukuk across all quantiles, consistent with pecking-order theory. Sovereign debt benchmarks uniformly promote corporate issuance. The COVID-19 shock sharply curtailed issuance, and the post-crisis coefficient remains negative at half the magnitude, confirming flight-to-quality behaviour and persistent market scarring.
Policymakers should pair banking-sector deepening with tax-neutrality and documentation reforms and institutionalise crisis-response mechanisms to safeguard issuance pipelines.
By isolating corporate sukuk, employing distribution sensitive econometrics and disaggregating banking variables, the study reconciles conflicting earlier results and delivers quantile-specific actionable guidance for building resilient Islamic capital markets.
