The Impact of Islamic Securities Issuances on Domestic Investment: A Case Study of Malaysia

Abstract

This study aims to analyze the impact of Islamic securities issuance on domestic investment in Malaysia during the period 2005-2019. Malaysia is considered a model, since it is the world's first country in issuing Islamic securities, the most important of which is Islamic Sukuk. This study investigates the efficiency of the Sukuk issuance market in Malaysia and its impact on the investment growth rate in the issuing economic sectors. Finally, it estimates the relationship between Islamic Sukuk issuance and domestic investment using the Cointegration Test and the Vector Error Correction Model (VECM). The results show a high performance of the Islamic Sukuk-market indicators in Malaysia, as well as a long-run equilibrium relationship between the estimated variables. In addition, Sukuk issuance has a significant positive impact on domestic investment in Malaysia.