No abstract

A rapid growth of Islamic finance in the past decades has motivated many investors to focus on Islamic stocks rather than conventional stocks. The argument whether the performance of Shariah compliant stocks are better compared to the conventional stocks still remains an open question. Therefore, this research examines whether there are differences in performance between the Shariah compliant stocks and the conventional stocks listed on the Australian Stock Exchange (ASX) for the period 2001-2013. Our findings show that there is a statistically significant difference in performance of the Islamic and conventional stocks listed on the ASX in terms of risk, otherwise the performance of the Islamic stocks tends to be similar to the conventional stocks. In addition, we report a statistically significant relationship between the returns of Shariah compliant and conventional stocks.