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Jurnal Ekonomi Malaysia

52 (1) 2018 243 – 256

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

School of Social and Economic Development
Universiti Malaysia Terengganu
21030 Kuala Nerus Terengganu
MALAYSIA

zairihan@umt.edu.my

College of Business Administration
Prince Sultan University
P.O. Box 66833 Riyadh
11586
KINGDOM OF SAUDI ARABIA

nzakaria@psu.edu.sa

Faculty of Economics and Administration
University of Malaya
50603 Kuala Lumpur
MALAYSIA

roza@um.edu.my

School of Social and Economic Development,
Universiti Malaysia Terengganu
21030 Kuala Nerus Terengganu
MALAYSIA

Hazman.s@umt.edu.my

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.

Keywords

arranger identity; certification eff; Islamic bond; Syndication
http://dx.doi.org/10.17576/JEM-2018-5201-20
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Abdul Halim, , Zakaria, , Zakaria, , & Samsudin, (2018). Arrangers’ Identity and the Syndicate Structure of Sukuk. Jurnal Ekonomi Malaysia, 52(1), 243–256. http://dx.doi.org/10.17576/JEM-2018-5201-20

@article{abdulhalim2018arrangers,
  title={Arrangers’ Identity and the Syndicate Structure of Sukuk},
  author={Abdul Halim, Zairihan and Zakaria, Nadisah and Zakaria, Roza Hazli and Samsudin, Hazman},
  journal={Jurnal Ekonomi Malaysia},
  volume={52},
  number={1},
  pages={243—256},
 

year={2018},
}

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