Objective
The growing complexity of trading instruments, the expansion of financial market activities, and the increasing number of financial institutions have significantly increased the importance of risk identification and assessment. Since risk evaluation is considered a crucial issue in the financial systems of all countries, this study aims to examine the effects of shocks to political risk components, along with economic complexity, on the development of the Islamic financial (Sukuk) market in Iran.
 
 
Methods
The data used in this research are based on the variables of the proposed model for the Iranian calendar years 1389–1401 (2010–2022). The data are seasonal and were obtained from the Central Asset Management Company of the Iranian Capital Market, the International Country Risk Guide (ICRG) database, and the MIT website. In this study, the Wald test was employed to examine the asymmetry of unexpected positive and negative shocks in the research variables affecting the development of the Sukuk market. In addition, the Nonlinear Autoregressive Distributed Lag (NARDL) approach was used to investigate and identify the nonlinear and asymmetric long-term relationships between political risk and its components, along with economic complexity, and the development of the Islamic financial market (Sukuk) in Iran.
 
Results
The results of the model estimations in this study, using the Wald test and the Nonlinear Autoregressive Distributed Lag (NARDL) approach, indicate that positive and negative shocks in political risk and its components—including corruption, investment profile, government stability, external tensions, internal tensions, and socioeconomic conditions—have asymmetric effects on the development of the Iranian Sukuk market. Among the political risk components, the most influential positive shock in the long run is associated with internal tensions, with a coefficient of 11.87, whereas the most influential negative shock is related to external tensions, with a coefficient of -5.60. In addition, economic complexity has a positive long-run effect on the development of the Sukuk market.
 
Conclusion
Developed financial markets mobilize household savings, reduce transaction and control costs, facilitate risk diversification and information acquisition about investment projects, so if the stock market develops, the level of investment in the economy can increase. In this regard, Sukuk has become one of the most important and effective financial instruments in the modern world, contributing to a fundamental strategic shift in the outlook of global investors. Due to their distinctive features and compliance with Islamic principles, Sukuk instruments, which are based on the financial innovations of Muslim scholars, have gained considerable popularity in recent years. In this context, the findings of the present study indicate that political risk components have a long-term and asymmetric effect on the development of the Sukuk market in Iran. The results also indicate that positive and negative shocks to political risk, especially in components such as government instability, political violence, and corruption control, have different and significant effects on the Islamic financial market development index. From a theoretical perspective, this study provides a new framework for understanding the institutional dynamics of Islamic financial development by analyzing the nonlinear relationship between political risk and sukuk. At the strategic and policy-making level, the results of the study emphasize that creating institutional stability, improving governance, and reducing political uncertainty are among the most important prerequisites for the sustainable growth of the sukuk market in Iran. Accordingly, it is recommended that policymakers focus on strengthening transparency, reducing corruption, and creating support structures appropriate to the characteristics of Islamic finance to pave the way for the expansion and deepening of this market.