Issue of Sukuk Market Development and Islamic Banking Institution: A Conceptual Paper

Abstract

Expanding the sukuk market and banking sector is essential to spur economic growth. However, these two components of financing providers do not cooperate fairly as a well-developed of one market is a drawback to another market. Hence, this study aims to highlight the issues encountered in developing one market that could threaten the expansion of other markets as capital providers to deficit units in the financial market. This paper is conceptual and exploratory in nature, and thus, it is supported by library research in an attempt to achieve the specified objective. Further empirical research can provide a better understanding and knowledge, and the issue that arises from this paper can be used as a future reference to understand the relationship between these two markets. Throughout the discussion of this issue, the policymaker will be aware and could construct a conclusive policy that is able to improve the sukuk market alongside the Islamic banking institutions while strengthening the financial market stability. This paper also offers insight into the development of the sukuk market and Islamic banking performance, which is relatively unknown to academics and Islamic finance industry practitioners.