Do green Sukuk spur economic growth, social development and financial performance? Empirical evidence from Indonesia
Qaisar Ali1 2*, Sulistya Rusgianto2, Shazia Parveen3, Hakimah Yaacob1, Razali Mat Zin1

1 Faculty of Islamic Economics and Finance, Universiti Islam Sultan Sharif Ali, Brunei Darussalam
2. Department of Shariah economics, Faculty of business and economics, Universitas Airlangga, Surabaya, Indonesia.
3. National College of Business Administration and Economics, Lahore, Pakistan

Abstract

Although green Sukuk (GS) as a sustainability enabler has started to emerge globally, a limited amount of research has focused on understanding its perspectives and potential. Accordingly, this research aims to explore the economic, social, and financial perspectives of GS by conceptualizing the effects of the issuance of green Sukuk (IGS) on economic growth (EG), social development (SD), and financial performance (FP). The fundamentals of the resource-based view (RBV) theory and institutional theory are employed to develop the theoretical underpinnings of this research. The panel data for IGS, EG, SD, and FP indicators between 2018-2021 was collected from Indonesia and was analyzed using the generalized method of movements (GMM) regression technique. The results indicate that IGS positively interacts with all three indicators (EG, SD, and FP). Further analysis reveals that IGS has a moderately positive effect on EG, a weak positive effect on SD, and a significant positive effect on FP. Our research findings contribute to developing an integrated business landscape covering major domains of environmental sustainability, socioeconomic development, and financial performance under the GS theme.

Keywords: Green Sukuk- Islamic green bonds- economic growth- social development- financial performance- green investments

Topic: Green and blue Islamic Finance