Issues in Islamic Equities: A Literature Survey

Masih, Mansur; Kamil, Nazrol Kamil Mustaffa; Bacha, Obiyathulla Ismath

doi:10.1080/1540496x.2016.1234370

Cited by 72 publications

(74 citation statements)

References 87 publications

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“…In the recent decade, a bulk of theoretical and empirical research has been devoted to investigate various aspects of Islamic equity investments (Saiti et al, 2014;Majdoub and Mansour, 2014;Dewandaru et al, 2014;Abdullah et al, 2016;Rahim and Masih, 2016). Concisely, Islamic equities or Shariah compliant stocks can be defined as investment category whereby Islamic principles are governed to screen stocks deemed to be permissible or prohibited for investment decisions by Muslim investors (Masih et al, 2018). The feature…”

Section: Literature Reviewmentioning

confidence: 99%

“…Typically, the question of whether investments in Islamic equities provide investors with more diversification benefits has gained growing interest among researchers. A comprehensive survey by Masih et al (2018) posits that there is a controversy in the academia whether Shariah compliant equities can represent a distinctive asset class that is different from conventional ones. This contentious issue rises to be so-called "de-coupling hypothesis," that is, the use of Shariah stocks filters and financial ratio screening make Islamic equities to have its own peculiar characteristics.…”

Section: Islamic Equities and Commoditiesmentioning

confidence: 99%

“…The conventional-based investors are typically involved in various sectors such as interestbased finance, conventional insurance, gaming, gambling, alcoholic beverages, and tobacco. However, Islamic investors have more constraints to invest, since those sectors are prohibited to be included in Islamic portfolio as governed by Shariah principles (Masih et al, 2018). Indeed, in several Shariah jurisdictions, other sectors such as hotels, entertainment, and…”

Section: Introductionmentioning

confidence: 99%

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Nexus between risk sharing vs non-risk sharing financing and economic growth of Bangladesh

Chowdhury

Akbar²,

Shoyeb

2018

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and finally, Quoc Cuong Phan and Taha Bhatti for the excellent research assistance in managing some of the papers in this issue. 646 MF 44,6 regarding the effect of these two variables to risk exposure and efficacy of both Islamic and conventional banking systems. In order to add more value to current literature with reference to the differences between Islamic and conventional banking systems, Bougatef and Korbi aimed to study the factors that explain intermediation margins under both Islamic and conventional banks operating in the Middle East and North Africa. By using the dynamic panel modeling approach, they revealed different determinants of net profit margins under these two systems. Utilizing various methodologies including Markowitz's (1952) portfolio optimization, visual data representations and the classic Fama-Macbeth (1973) two-pass procedure regressions, Cheong investigated the ability of the Islamic Gold Dinar to hedge against foreign exchange market volatility. His findings documented a new hedging instrument to diversify investors' currency portfolios. In the later article, Chowdhury, Akbar and Mohammad examined the relationship between Islamic financing principles and economic growth in Bangladesh using auto regressive distributive lags. Having considered all annual reports of Islamic banks in Bangladesh, this group of authors shed light on how the economic growth responds to the risk sharing and non-risk sharing instruments. In the wake of the GFC, predicting financial distress in banking systems has been increasingly more critical in order to prevent future economic downturns. In their paper, Halteh and his co-authors; Kumar and Gepp aimed to forecast the failure by using cutting-edge stochastic models including decision trees, stochastic gradient boosting and random forests to study 101 international publicly listed Islamic banks. Their findings add value to the literature on the issue of Islamic banking and predicting financial distress. To examine the differences in investors' perceptions concerning the response to the issuance of Sukuk and conventional bonds, Hassan, Ahmed and Rayfield observed significantly negative abnormal returns before and after the announcement date of Sukuk issuance. By utilizing linear and logistic regression models, they found an interesting connection: first, between firms' characteristics and these abnormal returns; and second, issuers' preferences between issuing Sukuk and conventional bonds. Mahmood, Gan and Nguyen, by utilizing the two-step system GMM estimation technique on 55 full-fledged Islamic banks from 11 different countries, have analyzed various factors at both firm-specific and macroeconomic levels, in order to explore their impacts on maturity transformation risk. This paper makes an important contribution to studying maturity transformation risk which is considered one of the major causes of the global financial crisis. Md Zabri and Mohammed examined the acceptability of the Cash Waqf-financial cooperative-Musharakah Mutanaqisah (MM) home financing...

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Section: Literature Reviewmentioning

confidence: 99%

Section: Islamic Equities and Commoditiesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Nexus between risk sharing vs non-risk sharing financing and economic growth of Bangladesh

Chowdhury

Akbar²,

Shoyeb

2018

View full text Add to dashboard Cite

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“…This body of research pays special attention to the validity of the decoupling hypothesis of the Islamic equity market from the conventional financial system. The decoupling hypothesis is rooted in the assumption that Islamic stocks, as a result of their more conservative nature and the sector and financial ratio screening, can be seen as an alternative investment class that has its own distinctive characteristics and does not move in tandem with mainstream stocks (Masih et al, 2016). Accordingly, the basic idea of the decoupling hypothesis is that there should be a weak correlation between Sharia-compliant stocks and their conventional counterparts.…”

Section: Literature Reviewmentioning

confidence: 99%

Risk transmission between Islamic and conventional stock markets: A return and volatility spillover analysis

Shahzad

Ferrer

Ballester

et al. 2017

International Review of Financial Analysis

164

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Abstract. This paper contributes to the current debate on the empirical validity of the decoupling hypothesis of the Islamic stock market from its mainstream counterparts by examining return and volatility spillovers across the global Islamic stock market, three main conventional national stock markets (the US, the UK and Japan) and a number of influential macroeconomic and financial variables over the period from July 1996 to June 2016. To that end, the VAR-based spillover index approach based on the generalized VAR framework developed by Diebold and Yilmaz (2012) is applied. The empirical analysis shows strong interactions in return and volatility among the global Islamic stock market, the conventional stock markets and the set of major risk factors considered. This finding means that the Islamic equity universe does not constitute a viable alternative for investors who wish to hedge their investments against the vagaries of stock markets, but it is exposed to the same global factors and risks hitting the conventional financial system. Therefore, this evidence leads to the rejection of the decoupling hypothesis of the Islamic stock market from conventional stock markets, which has significant implications for faith-based investors and policy makers in terms of portfolio diversification, hedging strategies and contagion risk.Keywords: Islamic stock market, conventional stock markets, global risk factors, return and volatility spillovers, spillover index approach JEL Classification: C58, G01, G15

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“…Regarding the main objective of the Sustainable Development Goals (SDGs), sharia banking is an industry that has a close relationship with SDGs (Ahmed, 2011;Nugroho et al, 2018;Chotib & Utami, 2014). Nevertheless, the implementation of Maqashid Asy Syariah and sharia banking business models that are prohibit from MAGHRIB transaction (Maysir, Gharar, Haram, and Riba) is a form of convergence that is following the whole SDGs (Abdullah, 2018;Masih, Kamil, & Bacha, 2016;Sukmadilaga & Nugroho, 2017). Also, currently Sharia Banks (Islamic Banks) are included in the BUKU III category which means the banks with core capital of IDR 5 trillion-IDR 30 trillion and refers to the regulatory provisions that BUKU III Banks are required to implement Sustainable Finance (SF).…”

Section: Introductionmentioning

confidence: 99%

Discourses of Sustainable Finance Implementation in Islamic Bank (Cases Studies in Bank Mandiri Syariah 2018)

Nugroho

Badawi

Hidayah

2019

IJFR

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The execution of sustainable finance (SF) in Islamic Bank (Sharia Bank) should be fused with financial products and services due to the compatibility of SF programs with Sharia rules. This article points to define the progress of SF implementation in the Bank Mandiri Syariah before the mandatory to implement regulation from financial Services Authority No. 1/POJK. 3/2017. The method used is qualitative and confined with the following research question (1) What is the precedence of the Government in implementing sustainable finance by regulation No. 51/POJK. 03/2017? (2) How is the progress of sustainable financial implementation on sharia banks during the period 2017 to 2018?. According to the results of the study through secondary data from financial statements, annual reports, and the company's internal data. The Bank Mandiri Syariah has implemented SF during 2018 with the well-presented portion of SF financing ratio from total financing amounting to 29.56%. Beside of that Bank Mandiri Syariah also already established the sustainable finance plan for five years (2019-2014). Nevertheless, to increase the community trust in Sharia banks regarding the suitable implement of SF in the future. The Islamic Bank need to ensure the commit from all stakeholders to make sharia products and services that implant in the SF program.

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Issues in Islamic Equities: A Literature Survey

Cited by 72 publications

References 87 publications

Nexus between risk sharing vs non-risk sharing financing and economic growth of Bangladesh

Nexus between risk sharing vs non-risk sharing financing and economic growth of Bangladesh

Risk transmission between Islamic and conventional stock markets: A return and volatility spillover analysis

Discourses of Sustainable Finance Implementation in Islamic Bank (Cases Studies in Bank Mandiri Syariah 2018)

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