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

Abdullah M. Al-Awadhi, Ahmad Bash, Ahmad F. Al-Mutairi and Ahmad M. Al-Awadhi
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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.

International Journal of Economics and Financial Issues, 2018, vol. 8, issue 2, 238-242

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.

Keywords: Returns; Islamic stocks; risk-aversion; segmentation; investment (search for similar items in EconPapers)
JEL-codes: C58 E44 G32 (search for similar items in EconPapers)
Date: 2018
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