Sukūk development and income inequality

Wahyu Jatmiko, M. Shahid Ebrahim, Houcem Smaoui

Research output: Contribution to journalArticlepeer-review


This paper investigates the link between sukūk development and income inequality by scrutinizing twenty-two countries’ data from 1995 to 2019. We employ the two-stage Fractional Regression Model to illustrate that sukūk issuance is associated with increased income disparity. This result is attributed to the sukūk design ignoring credit market frictions. This rationalizes the sukūk-inequality nexus in light of the ethical objectives of Islamic law. We argue that reinforcing property rights by mitigating the ill effects of excessive risk-taking (i.e., gharar) and endemic agency costs of debt (i.e., ribā) in our ethical framework can improve sukūk's role in socio-economic development.

Original languageEnglish
Article number101852
JournalJournal of International Financial Markets, Institutions and Money
Publication statusPublished - Oct 2023


  • Financial development
  • Income inequality
  • Islamic finance
  • Socio-economic development
  • Sukūk


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