On Sharia’a-compliance, positive assortative matching, and return to investment banking

Suren Basov and Muhammad Bhatti

Journal of International Financial Markets, Institutions and Money, 2014, vol. 30, issue C, 191-195

Abstract: In their recent paper Derigs and Marzban (2009) argued that Sharia’a-compliant strategies result in much lower portfolio performance than the conventional strategies. The main reason for their argument is of Sharia’a-compliance limits on the set of admissible investments. However, in the world of imperfect financial markets such a limitation may also have some beneficial consequences. We therefore, assume that a net disadvantage caused by such limitations is relatively small, but is magnified by equilibrium hiring strategies, which match Islamic banks with employees who have a lower average level of human capital.

Keywords: Adverse selection; Islamic banks; Sharia’s law (search for similar items in EconPapers)
JEL-codes: D4 D8 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:30:y:2014:i:c:p:191-195

DOI: 10.1016/j.intfin.2013.12.010

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