A review of Islamic stock market, growth and real-estate finance literature

Abstract

<jats:sec><jats:title content-type="abstract-subheading">Purpose</jats:title><jats:p>This paper reviews economic and finance research on Islamic investments. In the course of our review, we focus on the following issues: the performance of Islamic stock indexes, Islamic finance–growth nexus and Islamic real-estate investment trust market.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-subheading">Design/methodology/approach</jats:title><jats:p>This literature survey consists of two stages such as random and systematic. It begins with a random search of articles with the intention to explore the three different areas of Islamic banking and finance. In order to maintain some level of quality of the literature review, we explored inside citations of articles based on relevant and recent articles from SCOPUS and Web of Science.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-subheading">Findings</jats:title><jats:p>This paper represents an attempt to organise current research on Islamic stock markets, Islamic finance-growth nexus and Islamic real-estate finance: (1) the first prevailing finding is that Islamic stock indices are less volatile than conventional stock indices; (2) most empirical studies regarding Islamic finance–growth nexus focus on the impacts of banking sectors on growth and neglect other segments of the Islamic financial market; (3) based on our review of existing studies, there is no unanimous model for Islamic home financing in Islamic banks.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-subheading">Practical implications</jats:title><jats:p>The mixed findings in this area hinder the understanding of Islamic investment and prevent identifying trends that support decision-making. Our review provides suggestions for prospective research directions. Most empirical studies regarding Islamic finance–growth nexus focus on the impacts of banking sectors on growth and neglect other segments of the Islamic financial market.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-subheading">Originality/value</jats:title><jats:p>There is no literature review on Islamic finance-growth nexus and Islamic real-estate literature. Therefore, we are going to fill this gap to review these three different aspects of Islamic banking and finance.</jats:p></jats:sec>

Do ‘Shariah’ indices surpass conventional indices? A study on Dhaka Stock Exchange

“…Even if the volatility persists significantly for both indices, the Sharīʿah index is comparatively less volatile than that of the conventional counterpart in both long-run and crisis periods. Similarly, Saiti et al (2019) and Hassan et al (2020) reveal that the conventional indices are more volatile that the Islamic indices. Arshad and Rizvi (2013) unveils that the Sharīʿah indexes are less vulnerable to financial crisis compared to conventional indices of the world, Asia Pacific and emerging markets, and therefore, are safer and more stable.…”

Assessing the asymmetric effects of capital and money markets on economic growth in China

“…The contributions made by capital and money markets have proven their important nexus with economic growth and are well recognized as significant intermediate conduits driving economic growth by scholars ( Bukowski and Zięba, 2019 ; Destek et al., 2020 ; Haseeb et al., 2019 ; Hassan et al., 2020 ; Karimo and Ogbonna, 2017 ; Le, 2020 ; Le et al., 2019 ; Lestari et al., 2020 ; Ncanywa and Mabusela, 2019 ; Twinoburyo and Odhiambo, 2018 ), academics, and policymakers. But it is important to understand the magnitude of the effects of capital and money market indicators on economic growth, which is truly essential to help policymakers construct specific policies in light of the macroeconomic variables ( Chen et al., 2020 ).…”

Islamic Stock indices and COVID-19 pandemic

“…The investments in Islamic capital markets have gained momentum after the Global Financial Crisis of 2007–2009 as the empirical studies suggest that they performed well during the endogenous shocks like global financial crisis compared to the conventional investments ( Masih et al, 2018 ; Al-Khazali & Mirzaei, 2017 ; Anagnostidis et al, 2016 ; Alam & Rajjaque, 2016 ; Alam et al, 2016 ; Saiti et al, 2014 ; Ashraf, 2013 ). The performance of the Islamic investment vehicles is often credited to the distinct nature of the Islamic finance which endorses the idea of profit distribution and loss bearing and screens the companies based on the high exposure to interest-based leverage, low working capital, omission of complex financial products like derivatives and other exotic assets, prohibits firms whose investments are involved in activities like gambling, selling alcohol or pork, and connections with the real economy ( Abedifar et al, 2015 ; Hassan et al, 2020 ; Ibrahim, 2015 , 2019 ; Ibrahim & Alam, 2018 ; Ibrahim & Rizvi, 2017 ).…”