The influence of macroeconomic variables towards the issuance Islamic debt securities / Hayati Morshidi

The bond market is encouraged by the impending increase in Private Debt Securities (PDS) issuances especially the Islamic Debt Securities. Islamic Debt Securities (IDS) in general is known as Islamic bond. Macroeconomic variables (inflation rate, interest rate and GDP) are the factors that might influence the growth of IDS. Issuance of IDS means the total amount of Islamic bond approved by the Securities Commissions. This study is focusing on the influence of macroeconomic variables towards the issuance ofIDS. IDS is considered quite new in our bond market. The Malaysian Debt Market, stated that Malaysia’s bond market has increasingly demonstrated growing liquidity, reflective of the development in the capital markets. Also, within Malaysia’s debt capital market has been the advent of Islamic debt. The Malaysian bond market grew steadily prior to 1998.
With further support and encouragement expected from the Government in turning Malaysia into an Islamic capital market centre, the prospects for IDS growth in Malaysia remain bright by the Government’s pump-priming efforts via increasing its development expenditure for infrastructure and utilities. It has been found that the GDP had the most influencing towards the issuance of IDS and followed by inflation rate. The interest rate was found to have the least influence towards the issuance of IDS. In other words, most of the element of the macroeconomic variables were having certain influence towards the issuance of IDS