Abstract
Green sukuk has emerged as an innovative financial instrument bridging Islamic capital markets and sustainable development goals. This study investigates the key macroeconomic, institutional, and firm-level determinants of green sukuk issuance and examines its post-issuance financial performance across Malaysia and Indonesia over the period 2018–2023. Utilizing a sample of corporate and sovereign issuers and applying panel logit modeling alongside two-step system Generalized Method of Moments (GMM) estimation, the empirical findings reveal that regulatory incentives, institutional quality, Shariah governance robustness, and firm size significantly boost the propensity to issue green sukuk in both jurisdictions. Furthermore, the analysis of financial performance demonstrates the presence of a statistically significant greenium (pricing discount) in primary markets, which moderates cost of capital without compromising secondary market liquidity. While Malaysian issuers benefit more prominently from tax incentives and established Sustainable and Responsible Investment (SRI) guidelines, Indonesian sovereign issuances dominate volume, driving broader market awareness. Post-issuance financial performance metrics, measured via return on assets (ROA) and Tobin’s Q, indicate neutral-to-positive trajectories, underscoring that green sukuk integration aligns ethical Maqasid al-Shariah values with robust economic viability. These insights provide actionable implications for policymakers, financial regulators, and Islamic capital market participants seeking to scale environmental finance in emerging ASEAN economies.
