EXTERNAL DETERMINANTS OF GLOBAL SUKUK ISSUANCE: A COMPREHENSIVE LITERATURE REVIEW

Abstract

The global sukuk market has experienced significant growth as a Shariah-compliant alternative to conventional bonds, yet its development is influenced by various external determinants. Despite considerable research on sukuk issuance, existing literature is fragmented, often analyzing macroeconomic, institutional, and financial factors in isolation. Additionally, the impact of external shocks, such as geopolitical risks and the COVID-19 pandemic, on sukuk issuance remains underexplored. This study aims to achieve three key objectives by systematically reviewing the external determinants of global sukuk issuance, analyzing past empirical studies, and examining critical themes, including geopolitical uncertainties and economic disruptions. This study employs a systematic literature review (SLR) methodology using Scopus AI, ensuring a structured approach to data selection, thematic classification, and synthesis of findings. Relevant academic sources were identified based on keywords such as "sukuk issuance determinants," "macroeconomic factors and sukuk," and "market risks in sukuk issuance," with a focus on high-impact journals from the past two decades. Findings reveal that macroeconomic stability, regulatory clarity, and investor confidence play crucial roles in sukuk market development. Institutional determinants, such as governance quality and regulatory frameworks, significantly shape market accessibility, while financial factors, including market liquidity and risk exposure, influence sukuk pricing and issuance decisions. External shocks, including geopolitical risks and the COVID-19 pandemic, have also impacted sukuk market stability and investor sentiment. Theoretically, this study consolidates fragmented research into a unified framework, improving the understanding of sukuk market dynamics. Practically, it provides valuable insights for policymakers, financial institutions, and investors seeking to optimize sukuk issuance strategies and mitigate risks. Despite its contributions, the study is limited by its reliance on secondary data and variations in sukuk market structures across jurisdictions. Future research should incorporate empirical modeling to quantify the direct impact of external determinants on sukuk issuance, particularly in evolving global economic conditions.