We explore the connectedness and portfolio implications between Islamic and conventional bonds of global and GCC regions. We also compare which bonds are performing better during our sample period. Unlike previous studies, we focus on Islamic bond markets compared to their conventional counterparts and highlight the GCC bonds (Islamic and conventional) in respect of global bonds. We apply DCC-GJR-GARCH (1,1) method, Sharp ratio and portfolio implications strategy over the period from 01 September 2013 to 23 February 2022. Our time-varying results suggest that the relationship among all the variables varies over time, but most of them are positive, suggesting that there is a less diversification opportunity between Islamic and conventional bonds. Hedging and diversification benefits are found only in the limited period among these variables, especially between GCC bond and global bond, and global Sukuk and GCC Sukuk. The findings of risk-adjusted returns reveal that Islamic bonds outperform compared to conventional counterparts. Moreover, mixed results are found in the case of hedging cost, and majority of fund, based on the optimal weights, should be invested in Islamic bonds. Our study endows investors and regulators in the global, and GCC markets with new insights on how to shield their investments and the financial system from financial crisis through a hedging strategy with Islamic finance.

Purpose This study aims to examine the effect of risk disclosure (RD) on commercial banks’ credit rating (CR) in the context of Bangladesh. It also explores the factors influencing RD in both Islamic and conventional banks. Design/methodology/approach The sample includes 200 bank-year observations consisting of 20 commercial banks (15 conventional and 5 Islamic banks) from 2010 to 2019. The sample is further segregated into Islamic and conventional banks. Ordered logit and random effect ordinary least square models are used to analyze the data. Furthermore, the two-stage least squares approach is used to perform a robustness test. Findings This study shows that RD significantly positively impacts CR, with a stronger effect in Islamic banks than in conventional banks. This study also finds that banks’ age and leverage negatively influence CRs. Moreover, banks’ size and total capital have a positive and negative influence on CRs, respectively. This study also shows that the age of Islamic and conventional banks positively and negatively influences the RD scores, respectively. In contrast, the RD score of conventional banks is positively impacted by bank size. Practical implications By examining which variables substantially impact RD and, hence, CR scores, bank stakeholders may make better financing, investment and other policy decisions. Investors may choose stocks with a high level of RD in the annual reports as the earlier studies imply that higher RD enhances CR. Originality/value Only a few studies have examined the relationship between RD and CRs, while, to the best of the authors’ knowledge, this study is the maiden attempt in the Bangladesh context. This study also compares the link between Islamic and conventional banks.

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