Should Shariah-compliant investors include commodities in their portfolios? New evidence

This paper investigates the links between price returns for seven commodities and Shariah-compliant equities (developed and emerging markets) over the period from January 1996 to April 2013. Employing the dynamic conditional correlation (DCC) M-GARCH methodology, we show that the correlations between commodity and stock markets evolve over time and are highly volatile, particularly during the financial crisis, which has played a key role, emphasizing the increased integration between commodity and stock markets, and underlining the financialization of commodity markets. However, in the last couple of years the correlation between commodities and equities seems to be decaying. Hence, Islamic investors hopefully could gain from the diversification benefits by the inclusion of commodities into their portfolios

The Role of Gold as a Hedge and Safe Haven in Shariah-Compliant Portfolios

The paper is the first attempt to evaluate the role of gold as a hedge (negative or low correlation with equities in normal market conditions) and safe haven (negative or low correlation in times of market turbulence) by using the daily data for gold and Shariah-compliant equities ranging from January 1996 to April 2013, and comparing between developed and emerging markets in time-frequency domain. Wavelet Coherence technique is applied to identify the best time-frequency for gold as a hedge, and MGARCH-DCC to find out the reaction of gold to unfavorable market conditions as a safe haven. The results tend to indicate that gold maintains its capacity as hedging instrument at higher time-scales, while during the financial crisis it demonstrated a weak form of safe haven by showing almost zero correlation with the Shariah-compliant equities

Should Shariah-compliant investors include commodities in their portfolios? New evidence

This paper investigates the links between price returns for seven commodities and Shariah-compliant equities (developed and emerging markets) over the period from January 1996 to April 2013. Employing the dynamic conditional correlation (DCC) M-GARCH methodology, we show that the correlations between commodity and stock markets evolve over time and are highly volatile, particularly during the financial crisis, which has played a key role, emphasizing the increased integration between commodity and stock markets, and underlining the financialization of commodity markets. However, in the last couple of years the correlation between commodities and equities seems to be decaying. Hence, Islamic investors hopefully could gain from the diversification benefits by the inclusion of commodities into their portfolios

The Role of Gold as a Hedge and Safe Haven in Shariah-Compliant Portfolios

The paper is the first attempt to evaluate the role of gold as a hedge (negative or low correlation with equities in normal market conditions) and safe haven (negative or low correlation in times of market turbulence) by using the daily data for gold and Shariah-compliant equities ranging from January 1996 to April 2013, and comparing between developed and emerging markets in time-frequency domain. Wavelet Coherence technique is applied to identify the best time-frequency for gold as a hedge, and MGARCH-DCC to find out the reaction of gold to unfavorable market conditions as a safe haven. The results tend to indicate that gold maintains its capacity as hedging instrument at higher time-scales, while during the financial crisis it demonstrated a weak form of safe haven by showing almost zero correlation with the Shariah-compliant equities

Analysis of Europe's First Fully-Fledged Islamic Digital Bank in the Arena of New Age Banking

The study aims to provide the first systematic account of Europe's first fully-fledged digital Islamic banking service and review in detail with the available information. It explains the new-age banking concept and theory as well as identifies the role of insha in digital trends. The research primarily focuses on the concept of new-age banking and demonstrates the application of this concept by scrutinizing an Islamic digital banking platform. It selects ‘insha’, a digital banking service platform [in other words, Bank-as-a-Service platform] that provides digital banking services in Europe, as a case for this study. The study reveals two Tiers of the new age banking: Tier I NAB brought cost efficiency by reducing personnel expenses by replacing the workforce, and Tier II NAB has come front to reduce personnel expenses by replacing workforce intelligence directly. Besides, it also discloses four aspects of new-age banking: i) Accessibility, ii) Cost Advantage, iii) Time Efficiency, and iv) Security. On the other hand, the study shows the application of new-age banking by spotlighting an Islamic digital bank, insha, which experienced significant tractions within two months of inauguration, and the app has been downloaded over 9,000 times. This paper provides an excellent case, insha, to comprehend the concept of new-age banking, and manifests how it could facilitate customers to access the banking platform

On the dynamic links between commodities and Islamic equity

This paper investigates whether commodities offer potential diversification benefits for Islamic equity index investors in light of possible financialization of commodity markets. Using MGARCH-DCC and Wavelet Coherence analyses, our findings reveal that correlations between commodity markets and the Dow Jones Islamic Market World Index are time-varying and highly volatile throughout the January 1999-April 2015 period. A substantial and persistent increase was observed in the return correlations between commodities and Islamic equity at the onset of the 2008 financial crisis. However, trends in the recent two years suggest that this association is heading towards its pre-crisis levels, offering again diversification benefits for Islamic equity holders. This benefit varies across different commodities in various time scales. Overall, gold, natural gas, soft commodities, grains and livestock are better portfolio diversifiers than oil and other metals. Relative to medium-to-long term investors, short-term investors (less than 32 days horizon) gained better diversification benefit in most commodities during bullish, bearish and market recovery periods. These findings have implications to investors who are heterogeneous in risk tolerance and time preference as well as to policymakers who are concerned with market stability

Demystifying small and medium enterprises’ (SMEs) performance in emerging and developing economies

Applying the General-to-Specific modelling on World Bank Enterprise Survey data for 266 economies, this paper models five performance indicators based on 80 potential factors derived from firm characteristics, finance, informality, infrastructure, innovation, technology, regulation, taxes, trade and workforce concerning small and medium enterprises (SMEs). We find that the factors vary regarding statistical significance and magnitude between small and medium enterprises. For example, the percent of firms using e-mail to interact with clients/suppliers has a positive effect on the annual employment growth of medium enterprises, but not the case of small enterprises. The proportion of investments financed by equity or stock sales has an adverse impact on small enterprises, while there is no such effect on medium enterprises. We find that more drivers explained the annual employment growth and the percent of firms buying fixed assets compared to capacity utilization, annual labor productivity growth, and real annual sales growth. Keywords: SME, Performance, Firm characteristics, Finance, Informality, Infrastructure, Innovation and technology, Regulation and taxes, Trade, Workforce, Jel Classification: C51, D22, L2

A Systematic Literature Review on Vehicle-Purchasing Behaviour

The shift of consumer buying preferences toward green vehicle can alleviate environmental degradation to a certain extent. Nevertheless, the uptake of green vehicles is still low. To understand this phenomenon, this systematic review focuses on the factors that influence vehicle-purchasing behavior. This study adopted the PRISMA method for the review and utilized Scopus and Web of Science as the main journal databases. The findings from this systematic review contribute to the body of knowledge by providing the basis for future research to evaluate the purchase intention of green vehicles by non-green vehicle drivers and the reasoning behind their vehicle preferences. Keywords: systematic literature review; purchasing behaviour; green vehicles eISSN: 2398-4287© 2021. The Authors. Published for AMER ABRA cE-Bs by e-International Publishing House, Ltd., UK. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer–review under responsibility of AMER (Association of Malaysian Environment-Behaviour Researchers), ABRA (Association of Behavioural Researchers on Asians/Africans/Arabians) and cE-Bs (Centre for Environment-Behaviour Studies), Faculty of Architecture, Planning & Surveying, Universiti Teknologi MARA, Malaysia. DOI: https://doi.org/10.21834/ebpj.v6i17.288