Revised Malaysian Shariah Screening: Its Impact on Islamic Capital Market

Nor, Fauzias Mat; Shaharuddin, Amir; Marzuki, Ainulashikin; Ramli, Nur Ainna

doi:10.5430/rwe.v10n1p17

Cited by 10 publications

(8 citation statements)

References 37 publications

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“…On the contrary, the Removal of Sharia status leads to lower TPI. Lower TPI may be due to substantial selling pressure for affected stocks (Nor et al, 2019) that also suppressed the stock price after these firms lost their Sharia certification (Yazi et al, 2015), as such supported the liquidity hypothesis theory. These findings are significant at the 1% level and remain consistent in Models 7, 8 and 10, where ΔInst_Own is used instead of Inst_Own in the regression model.…”

Section: Long Term: Regression Analysismentioning

confidence: 58%

Does the Sharia-compliant Status Removal Announcement Matter? Liquidity, Trading Activities and Institutional Investors

Rozaimah Zainudin,

Karren Lee-Hwei Khaw

2024

aamjaf

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On 29th November 2013, the Security Commission Malaysia revised the Sharia-compliant screening policy and about 20% of the Sharia firms lost their certification for not meeting the additional criteria. Using 107 affected firms, we examine the removal announcement effect on the stocks’ liquidity and trading activities. Our analysis focuses only on the removal announcement due to the screening policy changes. We use 181 days event window for the short-term effect and multivariate panel estimation models for the long-term effect. The event study observes a decreasing trend for the liquidity measures, indicating a higher liquidity post-Sharia removal announcement among the affected stocks. Conversely, trading activities decrease substantially within the first few days post-event date before picking up gradually. The regression analysis confirms the results, but we do not find consistent results supporting the relationship between institutional investors and liquidity and trading activities. The study is among the pioneers to unfold the effect of Sharia-compliant status removal announcement due to the policy changes on the stock liquidity and trading activities within short and long-term perspectives. We also provide post-effect evidence on the change of the institutional investors due to the removal announcement on the liquidity and trading aspect.

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Section: Long Term: Regression Analysismentioning

confidence: 58%

Does the Sharia-compliant Status Removal Announcement Matter? Liquidity, Trading Activities and Institutional Investors

Rozaimah Zainudin,

Karren Lee-Hwei Khaw

2024

aamjaf

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“…It is evidently shown in the case of the withdrawal of the Shariah-compliant status of the investment company from Shariah listed to non-Shariah listed in Malaysia. Interestingly, in addition to the same finding, Nor et al (2019) found that the announcement from Shariah listed to non-listed has no significant impact on the overall return of the FBM Emas Shariah index.…”

Section: The Impact Of Snc Risk On Investmentsmentioning

confidence: 60%

“…According to Nor et al (2019), Kassim et al (2017) and Yazi, et al (2015), Shariah non-compliant financial investment of companies has affected their stock price. It is evidently shown in the case of the withdrawal of the Shariah-compliant status of the investment company from Shariah listed to non-Shariah listed in Malaysia.…”

Section: The Impact Of Snc Risk On Investmentsmentioning

confidence: 99%

Managing Shariah Non-Compliance Risk: Construction of a Low-Risk Shariah-Compliant Portfolio Using the Black-Litterman Portfolio Optimization Model

Bayram

Shahwan

Ergün

2023

AQUJIE

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This study explores the challenges of managing Shariah Compliant Portfolios and the importance of addressing Shariah non-compliance (SNC) risk, particularly in the context of social media and reputation risk. The paper proposes using the Black-Litterman portfolio optimization model and incorporating the views of Shariah scholars to construct a Shariah compliant portfolio that generates better returns than the benchmark portfolio while addressing SNC risk. Additionally, the paper discusses the benefits of adding gold to a portfolio of stocks and bonds and provides insights on reallocating gold's weight based on the investor's risk-return preferences. The paper provides a comprehensive review of the literature on portfolio selection models, SNC risk, SNC risk assessment, and portfolio diversification through Shariah-compliant gold investments. The study's methodology and data sources are explained, and the results are presented and analyzed. The paper concludes by summarizing the main findings and discussing their implications for investors, policymakers, and asset managers in the realm of Islamic finance.

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“…Implications of this study may include suggestions for improvement or adjustment of regulations in the Islamic capital market (Nor, 2019). Policymakers may consider changes or clarifications in the regulatory framework to ensure more clarity regarding Islamic standards and supervisory procedures (Alaoui, 2020).…”

Section: B Regulatory Improvementsmentioning

confidence: 99%

Ethnomethodology Approach in Investment Decision Making in Islamic Capital Market: An Interaction and Social Practice of Market Participants

Hidayat,

Supriyanto,

Mazidah

2023

MJIFM

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This study aims to investigate and analyze social interactions and social practices underlying investment decision-making in the Islamic capital market. The research focus includes an understanding of how Islamic values are reflected in the interaction of market participants, the communication practices used, and the impact of social context on investment decision-making. This research uses qualitative methods with an ethnomethodological approach through participatory observation, in-depth interviews, and document analysis. Researchers are involved in the daily activities of market participants, whether on the stock exchange, Islamic finance seminars, or investment forums. In-depth interviews were conducted with investors, brokers, and Islamic finance experts to gain a more in-depth perspective. The document analysis includes a study of Islamic finance literature, fatwas, and related documents. The results showed that social interaction and social practices of market participants have a significant role in making investment decisions in the Islamic capital market. Communication practices based on Islamic values play a key role in the decision-making process. The social and cultural context also influences investors’ perceptions and preferences towards Islamic financial instruments. These findings provide deep contextual insights into the factors influencing investment decisions in Islamic capital markets, which can be the foundation for the development of Islamic ethics-based investment strategies.

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Revised Malaysian Shariah Screening: Its Impact on Islamic Capital Market

Cited by 10 publications

References 37 publications

Does the Sharia-compliant Status Removal Announcement Matter? Liquidity, Trading Activities and Institutional Investors

Does the Sharia-compliant Status Removal Announcement Matter? Liquidity, Trading Activities and Institutional Investors

Managing Shariah Non-Compliance Risk: Construction of a Low-Risk Shariah-Compliant Portfolio Using the Black-Litterman Portfolio Optimization Model

Ethnomethodology Approach in Investment Decision Making in Islamic Capital Market: An Interaction and Social Practice of Market Participants

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