Determinants of the Trading Volume of Islamic Securities (Sukuk) in the Iranian Capital Market

• Objective: The secondary market plays an important role in enhancing the liquidity and efficiency of Sukuk and strengthening the capacity of Islamic finance. This study examines the factors associated with the secondary-market trading value of Sukuk in Iran’s capital market, with particular emphasis on security-specific characteristics, economic conditions, and capital market developments.

• Methodology: This applied study employs an ex post facto research design with an econometric approach. Monthly data for 38 Sukuk securities over the period from Farvardin 1392 to Esfand 1402 (March 2013 to March 2024) are analyzed using an unbalanced panel-data framework. Following diagnostic tests and the selection of the fixed-effects specification, the final model is estimated using Driscoll–Kraay standard errors robust to cross-sectional dependence.

• Findings: The results indicate that the number of trades, economic openness, remaining time to maturity, the exchange rate, and money supply are positively and significantly associated with the secondary-market trading value of Sukuk. In contrast, the Farabourse Index exhibits a negative and significant association with trading value. Yield to maturity, inflation, the interbank interest rate, and government expenditure do not exhibit statistically significant associations with trading value. The robustness tests further confirm the stability of the positive associations of the number of trades and economic openness with trading value across alternative model specifications.

• Conclusion: The findings indicate that secondary-market trading activity in Iran’s Sukuk market is associated with trading intensity, security maturity characteristics, economic openness, liquidity conditions, and developments in the broader capital market. Accordingly, the development of the secondary Sukuk market requires simultaneous attention to deepening trading activity, enhancing the tradability of securities, diversifying maturity structures, and strengthening investor participation.