Arrangers’ identity and the syndicate structure of sukuk
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-...
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Penerbit Universiti Kebangsaan Malaysia
2018
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my-ukm.journal.196392022-09-08T08:04:30Z http://journalarticle.ukm.my/19639/ Arrangers’ identity and the syndicate structure of sukuk Zairihan Abdul Halim, Hazman Samsudin, Nadisah Zakaria, Roza Hazli Zakaria, 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. Penerbit Universiti Kebangsaan Malaysia 2018 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/19639/1/jeko_521-20.pdf Zairihan Abdul Halim, and Hazman Samsudin, and Nadisah Zakaria, and Roza Hazli Zakaria, (2018) Arrangers’ identity and the syndicate structure of sukuk. Jurnal Ekonomi Malaysia, 52 (1). pp. 243-255. ISSN 0127-1962 https://www.ukm.my/jem/issue/v52i1/ |
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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. |
| format |
Article |
| author |
Zairihan Abdul Halim, Hazman Samsudin, Nadisah Zakaria, Roza Hazli Zakaria, |
| spellingShingle |
Zairihan Abdul Halim, Hazman Samsudin, Nadisah Zakaria, Roza Hazli Zakaria, Arrangers’ identity and the syndicate structure of sukuk |
| author_facet |
Zairihan Abdul Halim, Hazman Samsudin, Nadisah Zakaria, Roza Hazli Zakaria, |
| author_sort |
Zairihan Abdul Halim, |
| title |
Arrangers’ identity and the syndicate structure of sukuk |
| title_short |
Arrangers’ identity and the syndicate structure of sukuk |
| title_full |
Arrangers’ identity and the syndicate structure of sukuk |
| title_fullStr |
Arrangers’ identity and the syndicate structure of sukuk |
| title_full_unstemmed |
Arrangers’ identity and the syndicate structure of sukuk |
| title_sort |
arrangers’ identity and the syndicate structure of sukuk |
| publisher |
Penerbit Universiti Kebangsaan Malaysia |
| publishDate |
2018 |
| url |
http://journalarticle.ukm.my/19639/1/jeko_521-20.pdf http://journalarticle.ukm.my/19639/ https://www.ukm.my/jem/issue/v52i1/ |
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1744354629888507904 |
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13.211869 |