Deviation from religious trading norms

Abdullah M. Al-Awadhi

Journal of Behavioral and Experimental Finance, 2019, vol. 22, issue C, 22-30

Abstract: This paper investigates whether religiosity influences the preference of institutional investors to hold lottery-type stocks. We use data from Kuwait, which is characterized by a high level of religiosity, clearly defined investing Islamic religious rules and clear identification of the institutional investor’s religious identity. We find that Islamic institutional investors deviate from their religious norms by holding more lottery-type stocks than non-Islamic institutional investors, and this deviation may be explained by the evidence that Islamic institutional investors have stronger information signals to induce them to trade risky gambling stocks. Our results highlight a challenge for the regulators and Islamic Shariah auditors in countries that have Islamic institutions; namely, to ensure that the operations of Islamic institutions are free from prohibited excessive uncertainty (Gharar).

Keywords: Religiosity; Lottery-type stocks; Islamic trading (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:22:y:2019:i:c:p:22-30

DOI: 10.1016/j.jbef.2019.01.002

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