Does Islamic Bonds (Sukuk) Market Development Discourage Islamic Debt Growth?

The aim of this study is to forecast the sukuk market development influences on Islamic debt in largest Islamic stock markets in GCC countries (KSA and UAE). This Study apply time series analysis technic to estimate long run auto regressive distributed lag model (ARDL). The data covers from Q2-2000 to Q4-2020 for 31 quarterly observations, therefore, the results show a negative significant impact of sukuk Income on Islamic Debt in both counties, while Su-kuk Investment development has negative insignificant effect in KSA and negative significant impact in UAE. In ad-dition, Sukuk Financing Payables development proxies indicate positive insignificant impact on rung run Islamic debt in both selected countries, this leads to the theory that Islamic Bonds (Sukuk) is entirely different from traditional bonds regarding their characteristics and economic role. Furthermore, the study provides empirical evidence for inves-tors and policymakers that companies may issue Sukuk rather than traditional bonds when issuance of more outstand-ing debt and longer tenor is needed.