Abstract:

The objective of this research is to determine the effect of macroeconomic factors on sukuk market development in the Organization of Islamic Cooperation (OIC) countries, which is the largest issuer of sukuk market globally. Using Panel data from 10 OIC countries for the period 2006-2016. The size of the sukuk market is measured by the amount of outstanding sukuk to gross domestic product (GDP).  The results showed that macroeconomic factors that affecting the development of sukuk market in OIC countries are the size of economic, the stage of economic development, openness of economic, and exchange rate variability. When the macroeconomic conditions are stable then this will affect the issuers' decision to issue sukuk. A well-developed sukuk market can be an alternative source of financing while at the same time enhancing a country's financial resilience by balancing high dependence on the banking sector with fixed income sector.