What question did this study set out to answer?

To examine how sukuk market development associates with the short- and long-run dynamic adjustments of capital adequacy in Islamic banking systems.

August 16, 2026International Journal of Islamic and Middle Eastern Finance and Management

From depth to dynamics: sukuk market development and capital buffer adjustment in Islamic banking systems

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Authors

RYRamazan Yıldırım MÖMuhammed Hadin ÖNER ÖTÖmer Faruk Tekdoğan

Discussion

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Overview

Dynamic panel analysis finds sukuk market growth reduces long-term capital adequacy in Islamic banking systems, suggesting a need for integrated macroprudential monitoring.

Key Points

To examine how sukuk market development associates with the short- and long-run dynamic adjustments of capital adequacy in Islamic banking systems.
Analyzed quarterly system-level data from Islamic banks across ten countries between Q4-2013 and Q3-2024.
Employed a dynamic panel framework with pooled mean group (PMG) and fixed-effects estimators, alongside dynamic ordinary least squares and common correlated effects pooled models.
Measured sukuk market development as aggregate sukuk issuance relative to total Islamic banking assets.
Short-run changes in sukuk market development showed no statistically significant association with bank capitalization metrics.
Pooled mean group estimation indicated a statistically significant long-run association between higher sukuk market development and lower capital adequacy ratios, with statistically insignificant effects for Tier 1 capital and capital surplus.
Alternative dynamic estimators yielded varying signs, magnitudes, and significance levels, reflecting a nonuniform and conditional long-run relationship across systems.

Cite This Study

Yıldırım et al. (2026) studied this question.

synapsesocial.com/papers/6a8179abf2fb91fc834ace84 https://doi.org/10.1108/imefm-12-2025-0968

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August 16, 2026International Journal of Islamic and Middle Eastern Finance and Management

From depth to dynamics: sukuk market development and capital buffer adjustment in Islamic banking systems

View Full Paper

Ask AI

Bookmark

Authors

RYRamazan Yıldırım MÖMuhammed Hadin ÖNER ÖTÖmer Faruk Tekdoğan

Discussion

Member takes

Overview

Dynamic panel analysis finds sukuk market growth reduces long-term capital adequacy in Islamic banking systems, suggesting a need for integrated macroprudential monitoring.

Key Points

To examine how sukuk market development associates with the short- and long-run dynamic adjustments of capital adequacy in Islamic banking systems.
Analyzed quarterly system-level data from Islamic banks across ten countries between Q4-2013 and Q3-2024.
Employed a dynamic panel framework with pooled mean group (PMG) and fixed-effects estimators, alongside dynamic ordinary least squares and common correlated effects pooled models.
Measured sukuk market development as aggregate sukuk issuance relative to total Islamic banking assets.
Short-run changes in sukuk market development showed no statistically significant association with bank capitalization metrics.
Pooled mean group estimation indicated a statistically significant long-run association between higher sukuk market development and lower capital adequacy ratios, with statistically insignificant effects for Tier 1 capital and capital surplus.
Alternative dynamic estimators yielded varying signs, magnitudes, and significance levels, reflecting a nonuniform and conditional long-run relationship across systems.

Cite This Study

Yıldırım et al. (2026) studied this question.

synapsesocial.com/papers/6a8179abf2fb91fc834ace84 https://doi.org/10.1108/imefm-12-2025-0968

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