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This paper aims to examine the effect do Sukuk Spur Infrastructure Development of Sukuk market expansion on infrastructure development for a sample of 15 emerging countries over the period 1997–2018. The paper also compares the role of Sukuk in infrastructure development to that of the size of the banking system, bond market development and stock market development.

A novel index of infrastructure development is constructed via principal component analysis. This index is regressed on Sukuk market development and other macroeconomic and institutional variables. To tackle the problems of heteroscedasticity and the existence of serial correlation in the residuals, the panel model is estimated using the generalized least squares (GLS) procedure with random effects and robust standard errors.

The evidence shows that a well-developed Sukuk market contributes to the expansion of the country’s infrastructure, whereas a larger banking system and a better capitalized stock market do not have any significant effect on infrastructure development. Surprisingly, well-developed bond markets jeopardize infrastructure expansion, thereby pointing to a potential crowding-out effect between Sukuk and bonds in financing infrastructure investments. Additionally, per capita GDP and education are positively related to infrastructure development, whereas inflation has a negative effect on the country’s proliferation of infrastructure.

This study uses a novel infrastructure index via principal component analysis and shows that Sukuk markets fill an important gap in the financing of large-scale and long-term projects. This result is novel and has not been documented in previous research.

The purpose of this paper was to investigate the determinants of Islamic banks’ profitability using longitudinal data from 1992 to 2008 of almost all Islamic banks in the world.

An unbalanced panel data fixed-effects regression model was used.

The results of the study indicate that capital ratio, other operating income, GDP per capita, bank size, concentration and oil prices affected Islamic banks positively. Insurance schemes, foreign ownership and real GDP growth affected Islamic banks negatively.

This study did not include data beyond 2008 (the financial crisis), which can be considered a limitation to this study. However, evidence suggests that including data beyond 2008 would not have changed the outcome of the study[1].

The paper adds to the literature on the determinants of Islamic banks’ profitability for the reasons mentioned above. In addition, this study used a purified sample of Islamic banks (see the Data section for details). Furthermore, to the author’s knowledge, this is the first time deposit insurance has been included in a study related to Islamic banks’ profitability.