The Role of Sovereign Sukuk in Financing Sustainable Infrastructure in Islamic Countries: Within the Framework of Dynamic Panel ARDL Modeling

Sovereign sukuk, as a Sharia-compliant financing instrument, have gained increasing attention in recent years, particularly in the development of infrastructure. This study aims to empirically assess the impact of sovereign sukuk issuance on sustainable infrastructure investment in Islamic countries. To this end, annual data from five Islamic countries- Malaysia, Saudi Arabia, Indonesia, the United Arab Emirates, and Turkey -over the period 2010 to 2024 are examined. The dependent variable is the ratio of gross fixed capital formation to GDP, while the independent variables include sovereign sukuk issuance and the public debt-to-GDP ratio. A panel autoregressive distributed lag (ARDL) approach is employed to estimate both short-run and long-run relationships. The results of stationarity and cointegration tests confirm the existence of a long-run relationship among the variables. Model estimations show that sovereign sukuk issuance has a positive and statistically significant effect on infrastructure investment, while the public debt-to-GDP ratio exerts a negative and significant effect. The error correction term is negative and significant, indicating strong convergence toward long-run equilibrium. These findings provide empirical and documented evidence of the capacity of sovereign sukuk to enhance sustainable infrastructure development in Islamic countries.