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Returns of Islamic Stocks in Saudi Arabia: Segmentation and Risk-Aversion

Author

Listed:
  • Abdullah M. Al-Awadhi

    (College of Business Studies, the Public Authority for Applied Education and Training, Kuwait,)

  • Ahmad Bash

    (College of Business Studies, Public Authority for Applied Education and Training, Kuwait)

  • Ahmad F. Al-Mutairi

    (College of Business Studies, Public Authority for Applied Education and Training, Kuwait,)

  • Ahmad M. Al-Awadhi

    (Kuwait Consultancy Group, Kuwait.)

Abstract

This study investigates whether religious-based trading practices affect market returns. We use data from Saudi Arabia, which has clear defined religious rules on investing in stock markets. Using panel regression model, we find that non-Islamic stocks in this market have lower returns compared to Islamic stocks. These results conflict with Merton's market segmentation theory.

Suggested Citation

  • Abdullah M. Al-Awadhi & Ahmad Bash & Ahmad F. Al-Mutairi & Ahmad M. Al-Awadhi, 2018. "Returns of Islamic Stocks in Saudi Arabia: Segmentation and Risk-Aversion," International Journal of Economics and Financial Issues, Econjournals, vol. 8(2), pages 238-242.
    • Handle: RePEc:eco:journ1:2018-02-28
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    References listed on IDEAS

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    More about this item

    Keywords

    Returns; Islamic stocks; risk-aversion; segmentation; investment;
    All these keywords.

    JEL classification:

    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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