10 papers analyzed
These studies suggest that Islamic indices can offer competitive performance, particularly in terms of risk-adjusted returns and during financial crises, while also providing ethical investment options for faith-based investors.
Islamic indices, which are stock market indices that comply with Islamic law (Shariah), have gained significant attention in recent years. These indices exclude businesses involved in activities prohibited by Islamic principles, such as alcohol, gambling, and interest-based finance. This synthesis examines the performance, efficiency, and risk characteristics of Islamic indices compared to their conventional counterparts.
Performance Comparison:
Market Efficiency:
Risk Characteristics:
Investment Viability:
Standardization and Criteria:
Islamic indices generally perform on par with or slightly better than conventional indices, especially during financial downturns. They offer competitive risk-adjusted returns and provide a viable investment option for faith-based investors. While conventional indices are typically more efficient, Islamic indices have been improving in efficiency over time. The lack of standardization in the criteria for Shariah compliance remains a challenge, but overall, Islamic indices present a robust alternative for both faith-based and conventional investors seeking diversification.
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