The Distinction Between Sharia Market and Conventional Market: A Study on Indonesia Stock Exchange

Nurhayadi, Yadi; Rito, Rito

doi:10.23917/mijeb.v2i1.9383

Cited by 3 publications

(3 citation statements)

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“…The conventional market disregards the "halal-haram" aspects [5] and does not align with the principles of Shariah or Islamic law. It uses the concept of interest containing usury, and speculative/manipulative transactions (Nurhayadi and Rito, 2019). Contrarily, the Islamic market follows the principles of Shariah or Islamic law, prohibiting the "halal-haram" aspects.…”

Section: Literature Review 21 Conventional and Islamic Marketsmentioning

confidence: 99%

Are gold and cryptocurrency a safe haven for stocks and bonds? Conventional vs Islamic markets during the COVID-19 pandemic

Widjaja

Gaby

Havidz

2023

EJMBE

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PurposeThis study aims to identify the ability of gold and cryptocurrency (Cryptocurrency Uncertainty Index (UCRY) Price) as safe haven assets (SHA) for stocks and bonds in both conventional (i.e. stock indices and government bonds) and Islamic markets (i.e. Islamic stock indices and Islamic bonds (IB)).Design/methodology/approachThe authors employed the nonadditive panel quantile regression model by Powell (2016). It measured the safe haven characteristics of gold and UCRY Price for stock indices, government bonds, Islamic stocks, and IB under gold circumstances and level of cryptocurrency uncertainty, respectively. The period spanned from 11 March 2020 to 31 December 2021.FindingsThis study discovered three findings, including: (1) gold is a strong safe haven for stocks and bonds in conventional and Islamic markets under bearish conditions; (2) UCRY Price is a strong safe haven for conventional stocks and bonds but only a weak safe haven for Islamic stocks under high crypto uncertainty; and (3) gold offers a safe haven in both emerging and developed countries, while UCRY Price provides a better safe haven in developed than in emerging countries.Practical implicationsGold always wins big for safe haven properties during unstable economy. It can also win over investors who consider shariah compliant products. Therefore, it should be included in an investor's portfolio. Meanwhile, cryptocurrencies are more common for developed countries. Thus, the governments and regulators of emerging countries need to provide more guidance around cryptocurrency so that the societies have better literacy. On top of that, the investors can consider crypto to mitigate risks but with limited safe haven functions.Originality/valueThe originality aspects of this study include: (1) four chosen assets from conventional and Islamic markets altogether (i.e. stock indices, government bonds, Islamic stock indices and IB); (2) indicator countries selected based on the most used and owned cryptocurrencies for the SHA study; and (3) the utilization of UCRY Price as a crypto indicator and a further examination of the SHA study toward four financial assets.

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Section: Literature Review 21 Conventional and Islamic Marketsmentioning

confidence: 99%

Are gold and cryptocurrency a safe haven for stocks and bonds? Conventional vs Islamic markets during the COVID-19 pandemic

Widjaja

Gaby

Havidz

2023

EJMBE

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“…Studies highlight differences in the response of Sharia Stock Markets to macroeconomic variables such as inflation and interest rates. Some research suggests that Sharia Stock Markets may exhibit different reactions to inflation compared to conventional stock markets, possibly due to the prohibition of prohibited goods and an aversion to excessive risktaking in Islamic financial principles (Indarwati & Widarjono, 2021;Nurhayadi & Rito, 2019). Moreover, the impact of inflation on the volatility of Sharia Stock Markets in developed and developing countries has been explored, with findings suggesting that Islamic stock indices may demonstrate greater resilience to financial crises and unique characteristics that differentiate them from conventional stock markets (Sampurna & Maronrong, 2019).…”

Section: Inflation and Sharia Stock Marketmentioning

confidence: 99%

Examining the Role of Inflation Moderation in Mitigating the Impact of Crude Oil Prices on Indonesia's Sharia Stock Market

Noval,

Nur Syamsu,

Syaakir Sofyan

et al. 2023

Kelaniya J Manage

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This study investigates the impact of crude oil prices on Indonesia's Sharia stock market, considering inflation as a moderating variable to address existing debates in prior research. Utilizing data from June 2011 to December 2021, including the Indonesian Sharia Stock Index (ISSI), World Texas Intermediate (WTI), and inflation, the study employs Moderated Regression Analysis (MRA) to uncover significant positive correlations between crude oil prices and the Sharia stock market. The findings highlight the moderating role of inflation, indicating that the market weakens when crude oil prices rise alongside inflation and strengthens in the absence of inflationary pressures. Practical implications suggest portfolio diversification for investors to manage associated risks. The study contributes theoretically by introducing additional moderator variables and offers empirical insights, yet acknowledges limitations, advocating for further research to deepen the understanding of the complex relationship between crude oil prices, inflation, and the Sharia Stock Market in Indonesia.

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“…They assume the Jakarta Islamic Index (JII) and the Indonesia Sharia Stock Index (ISSI) as a representation of the sharia market and the Jakarta Composite Index (IHSG) and the Jakarta Stock Exchange Liquid (LQ45) as a representation of the conventional market. Subsequent research by Rito;Azizah, 2018) revealed that the assumption that the IHSG and LQ45 represent conventional markets, because the IHSG and LQ45 are also dominant Islamic issuers. Their research specifically found that Islamic stocks are better than conventional stocks.…”

Section: Introductionmentioning

confidence: 99%

Stock Performance Comparison between Green Innovation Sharia Companies and Green Innovation Non-Sharia Companies: Evidence from Indonesia Stock Exchange

et al. 2021

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This Research is about comparison between sharia companies and non-sharia companies in the stock market. Several previous studies have shown that in the stock market, the stock performance of sharia companies is better to that of non-sharia companies. Then this research increases the qualification of the companies to become companies that have implemented green innovation technology. This qualification is applied to companies listed in the Sri-Kehati index on the Indonesia Stock Exchange. Through bivariate and multivariate analysis, the results showed that the stock performance of non-sharia companies was better than those of sharia companies. Bivariate analysis show that the positive gradient of non-sharia trendline (168.37) is bigger than sharia trendline (11.633). The coefficient of determination between non-sharia stocks and Sri-Kehati index (86.41%) is bigger than between sharia stocks and Sri-Kehati index (26.46%). Multivariate analysis obtained a multiple linear regression equation of 1 2 yˆ =117.187 + 0.0081x1 + 0.014397 x2. This equation shows that the variable coefficient of the value of sharia stocks is smaller than the coefficient of the variable value of non-sharia stocks. These facts are based on research on Sri-Kehati index data from 2016 to 2019. The results of this study indicate that investors prefer to invest in shares in non-sharia companies than in sharia companies. The results also indicate that increasing the qualifications of a sharia company to become a company that applies green innovation technology will not necessarily increase its share value. Is upgrading the qualification of a sharia company to a sharia company that applies green innovation technology a mistake? Meanwhile, Indonesia is a country with the largest Muslim population in the world.

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The Distinction Between Sharia Market and Conventional Market: A Study on Indonesia Stock Exchange

Cited by 3 publications

References 0 publications

Are gold and cryptocurrency a safe haven for stocks and bonds? Conventional vs Islamic markets during the COVID-19 pandemic

Are gold and cryptocurrency a safe haven for stocks and bonds? Conventional vs Islamic markets during the COVID-19 pandemic

Examining the Role of Inflation Moderation in Mitigating the Impact of Crude Oil Prices on Indonesia's Sharia Stock Market

Stock Performance Comparison between Green Innovation Sharia Companies and Green Innovation Non-Sharia Companies: Evidence from Indonesia Stock Exchange

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