The Degree Of Economic Distress In Sukuk Issuing Countries

Abstract

Purpose of the study: The present study estimates the MI indicator for 19 sukuk issuing countries. The Misery Index (MI) is an economic indicator calculated by adding the unemployment rate to the inflation rate for an economy. It measures the degree of economic distress in an economy.

Methodology: The MI is calculated by adding inflation to unemployment for each of the 19 sukuk issuing countries. Data are annual covering the period of 1991 until 2019. Other economic indicators are also calculated.

Main findings: The assumption is that higher inflation and unemployment rate creates economic and social costs for a country. The findings suggest that inflation is a pressing issue in Kazakhstan, Turkey, Sudan, Indonesia, Pakistan, Egypt, and Iran. Conversely, unemployment is more prominent in Egypt, Senegal, Saudi Arabia, Oman, Malaysia, Jordan, and Bahrain. Based on the estimates of the misery index and other macroeconomic indicators mentioned above, some sukuk issuing countries need to boost their capital and current account positions to provide a stable environment for potential sukuk launches.

Novelty of the study: The macroeconomic indicators of sukuk issuing countries are important elements in ensuring sukuk market development. To policymakers, the MI estimations imply the effectiveness of policy stance over the years and indicate areas of policy improvements in curbing either inflation or unemployment or both.