Liquidity M2, Inflation, And Sukuk Issuance: Empirical Evidence

The volume of sukuk issuance is expanding day by day, which book a high place in the global finance market, requiring developers and researchers to spend more time on this topic. This study investigates the relationship between liquidity M2 and inflation rate with the Sukuk Issuance Volume in the Short and Long Runs in Malaysia. The current study uses an econometric approach to reveal this relationship by applying the model of ARDL and the Cointegration test. The data of this study started from the fourth month of 2011 to the end of 2020. The result of this study shows that there is a high cointegration relationship of the equation in the long-term. In addition, liquidity M2 (LM2) does not affect the on sukuk issuance volume (SIV) in the long-term, while it negatively influences SIV in the short-term. The inflation rate (INFL) negatively affects SIV in the long-term, while INFL positively influences SIV in the short term. This study contributes to the existing literature with the finding of LM2 on SIV in both short-term and long-term in Malaysia.