Fifteenth International Conference on Environmental, Cultural, Economic & Social Sustainability

Abstract

Sukuk (Islamic bond) is an alternative source of financing that has been significantly decreasing the government’s foreign debt, especially in Indonesia. Yet, research about investing sustainability in sukuk market were very thin. The objective of this research is to examine the impact of investor’s characteristics, i.e. conventional investors, sharia investors, domestic investors and foreign investors on sukuk investing sustainability, while also investigates the determinant factors of sukuk investing sustainability. Using a univariate analysis to Indonesian sukuk auction market data from 2009-2017, this research finds that, compared to the sharia and foreign investors, the domestic and conventional investors receive higher proportion allocation and thus have a more steady state of investing sustainability. However, using a multivariate regression model, there is likely no difference of wealth among the group of investors during this observation period. In terms of the determinant factors, this study finds that the level of uncertainty on investment tends to impact on investing sustainability but no other factors such as the level of share allocation, successful bids rate and the level of competition. These findings show that investing sustainability in Indonesian sukuk market depends on investor’s characteristics and the level of uncertainty of the investment.