Is the islamic equity market independent of the influence of primary commodities ? Malaysian evidence

Siti Lajis and Abul Masih

MPRA Paper from University Library of Munich, Germany

Abstract: This paper is an attempt to test the influence of commodities such as, the primary export commodities on the Islamic equity market. Malaysia is taken as a case study. The standard time series techniques are used for the analysis. The results tend to indicate that the Islamic equity market is exogenous, i.e., it is independent of the influence of commodities.. This finding appears to be a bit counter-intuitive in that the Islamic equity is expected to be closely linked with the real sector, represented by its endogeneity vis-à-vis the selected commodity variables. Based on this, the study confirms the perception that Islamic equity is a subset market of the conventional capital market. The empirical analysis tends to suggest that policy measures and structural reforms may be initiated in order to avoid financialization and decoupling of the Islamic equity market from the real sector, as in the case of conventional equity market.

Keywords: Islamic Equity; Commodities; VECM; VDC; Malaysia (search for similar items in EconPapers)
JEL-codes: C22 C58 E44 (search for similar items in EconPapers)
Date: 2018-06-30
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