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PurposeThe paper examines the relationship between Islamic banking and the growth of the economy in Nigeria in both the short run and long run.Design/methodology/approachThe study employs quarterly secondary time series data for Islamic banking as well as major macroeconomic variables to study the contribution of Islamic banking to the economy of Nigeria. It employs autoregressive distributed lags (ARDL) and error correction model (ECM) approaches from 2013 quarter 1 up to 2020 quarter 2.FindingsThe results show that Islamic banking has a positive contribution to Nigeria's economy in both short run and long run, but this contribution is insignificant.Practical implicationsPolicymakers should endeavor to redesign the country's financial architecture and come up with policies that can support the growth of Islamic finance sector. This will significantly strengthen Nigeria's position as one of the leading Islamic finance hubs in Africa.Originality/valueThis is the first study to examine the contribution of Islamic banking to the Nigerian economy according to the best knowledge of the authors.

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This paper examines the relationship among financial inclusion, financial stability,and income inequality in some selected Organization of Islamic Corporations (OIC)countries. Data were analyzed using dynamic panel estimation and quantile regressionfor 47 OIC countries during 2006 - 2016. The results of dynamic GMM reveal thatfinancial inclusion has a positive and significant effect on both financial stability andincome inequality. This implies that increased financial access helped narrow the gapbetween the rich and poor as well as provided financial stability in OIC countries.Therefore, policy makers should strive to design policies that will make financialservices more available and affordable to the masses. Thus, it is safe to conclude thatavailability of both Islamic and conventional finances in OIC countries contributespositively to the development of the countries.

The aim of the present research is to highlight whether there exist any diversification opportunities from investing in developed and developing countries’ Shariah-compliant and non-Shariah-compliant stock markets during global financial crisis (GFC) and the COVID-19 pandemic periods. For this purpose, we employ daily data for both Shariah and non-Shariah indices from 29 October 2007 to 31 December 2021. The study uses multivariate GARCH-DCC and wavelet approaches to examine if there exist diversification opportunities in the selected markets. Evidence from this study shows that although the developing markets’ stock returns experience high volatility of a similar degree, the conventional indices of Malaysia have the highest volatility among them. This shows that Shariah indices have less exposure to risk and higher possibilities of diversification compared to their conventional counterparts. Regarding developed markets, the Japanese conventional index and the U.S. Shariah indices are more volatile compared to other indices in the market. Moreover, the results of the wavelet power spectrum show significant and higher volatility during the COVID-19 pandemic rather than the GFC. Similarly, the Chinese conventional market experienced minimum variance during the GFC and COVID-19 pandemic period. On the other hand, the results of wavelet-coherence transform indicate that the Japanese Shariah-based market offered better portfolio opportunities for U.S. traders during the GFC and the COVID-19 pandemic periods. Hence, opportunities for investment in this selected market are basically close to zero. Therefore, investors should carefully choose which stocks they can include in their investment portfolio.

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PurposeThis study investigates the presence of portfolio diversification benefits for South African, Nigerian, Ghanaian and Kenyan fixed-income investors diversifying bond portfolios in the Malaysian sovereign Sukuk market.Design/methodology/approachThe paper uses wavelet coherence and a multivariate generalized autoregressive conditional heteroscedastic (GARCH) model. The data cover the period from September 2013 to January 2019.FindingsThe findings obtained from the wavelet coherence model reveal evidence of portfolio diversification opportunities for African fixed-income investors in the Malaysian sovereign Sukuk market. These opportunities are more significant in the short- and medium-term investment horizons than in the long-term. Also, the results of multivariate GARCH show that the Malaysian Sukuk market has a negative unconditional correlation with the South African bond market, signifying better diversification benefits for these investors.Practical implicationsThe findings have implications for both fund managers and investors intending to include Sukuk in a diversified portfolio to reduce their risks and maximize their return from bonds.Originality/valueTo the best knowledge of the authors, this is the first study to examine the opportunities for African investors in the Malaysian Sukuk market.

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