Sukuk, Banking System, and Financial Markets: Rivals or Complements?

In this paper, used the system GMM estimation technique to study the effects of the financial development on Sukuk markets by using a panel dataset of 11 countries from 1995 to 2015. At the First, research findings shows that Sukuk and bank financing are substitutes. Economies where banks play a key role in providing private credit issue less Sukuk. Second, the evidence shows that Sukuk are complements to bonds and stocks. More Sukuk are issued in market-oriented economies. Finally, this paper shows that the 2008 global financial crisis has a positive effect on Sukuk markets development.