Do Islamic stock markets outperform conventional markets when facing cryptocurrency threats? Empirical evidence from Asian countries
Cryptocurrencies have emerged as a transformative force across various sectors of the global economy, particularly in financial markets, where they influence asset classes and market dynamics. In this context, Asia's leadership in both cryptocurrency adoption and Islamic finance provides a uniq...
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| Format: | Article |
| Language: | English |
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Elsevier
2025-01-01
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| Series: | Social Sciences and Humanities Open |
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| Online Access: | http://www.sciencedirect.com/science/article/pii/S2590291125002001 |
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| author | Naji Mansour Nomran Razali Haron Abdelkader Laallam Ali Ateeq Mohammed Alzoraiki Marwan Milhem Joji Abey |
| author_facet | Naji Mansour Nomran Razali Haron Abdelkader Laallam Ali Ateeq Mohammed Alzoraiki Marwan Milhem Joji Abey |
| author_sort | Naji Mansour Nomran |
| collection | DOAJ |
| description | Cryptocurrencies have emerged as a transformative force across various sectors of the global economy, particularly in financial markets, where they influence asset classes and market dynamics. In this context, Asia's leadership in both cryptocurrency adoption and Islamic finance provides a unique opportunity to assess whether Islamic stock markets outperform their conventional counterparts amid cryptocurrency volatility. This study employs advanced econometric techniques, including panel unit root tests, Johansen-Fisher cointegration, pairwise Granger causality tests, and regression analysis, to empirically examine the influence of cryptocurrencies on the performance of Islamic and conventional stocks. Weekly data from 13 Asian countries spanning 2016–2019 are analyzed, with a focus on two distinct periods: before and after the 2017–2018 cryptocurrency crash. The findings reveal bidirectional significant causality between conventional stock returns and cryptocurrency returns. In contrast, Islamic stock returns exhibit a unidirectional influence on cryptocurrency prices, with no reciprocal effect observed across all panels. The findings indicate that during both overall and pre-crash periods, cryptocurrency returns positively affect Islamic and conventional stock markets, with Islamic indices experiencing a stronger impact. However, post-crash, both conventional and Islamic stocks suffer negative consequences from cryptocurrency fluctuations, with conventional stocks experiencing more pronounced losses, while Islamic stocks display greater resilience. This suggests that investor sentiment and risk appetite in Islamic markets differ from those in conventional markets, particularly during periods of cryptocurrency instability. Overall, our findings indicate that rising cryptocurrency returns, especially post-crash, may divert investors from stock markets across Asia, with conventional markets being more affected than Islamic markets. The study offers valuable insights for investors, policymakers, and regulators, emphasizing that conventional stock market investors face greater exposure to cryptocurrency risks. It advocates for the implementation of robust policies to mitigate these risks and recommends expanding future research to encompass other regions and incorporate additional control variables. |
| format | Article |
| id | doaj-art-598d8ae3ae014b0d9566ead59d76ba7e |
| institution | DOAJ |
| issn | 2590-2911 |
| language | English |
| publishDate | 2025-01-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Social Sciences and Humanities Open |
| spelling | doaj-art-598d8ae3ae014b0d9566ead59d76ba7e2025-08-20T03:21:46ZengElsevierSocial Sciences and Humanities Open2590-29112025-01-011110147210.1016/j.ssaho.2025.101472Do Islamic stock markets outperform conventional markets when facing cryptocurrency threats? Empirical evidence from Asian countriesNaji Mansour Nomran0Razali Haron1Abdelkader Laallam2Ali Ateeq3Mohammed Alzoraiki4Marwan Milhem5Joji Abey6Department of Finance and Accounting, College of Business Administration, Kingdom University, Riffa, 40434, Kingdom of BahrainIIUM Institute of Islamic Banking and Finance, International Islamic University Malaysia, MalaysiaDepartment of Finance, School of Business, King Faisal University, Al-Ahsa, 31982, Saudi Arabia; Corresponding author.Administrative Science Department, College of Administrative and Financial Science, Gulf University, Sanad 26489, Kingdom of BahrainAdministrative Science Department, College of Administrative and Financial Science, Gulf University, Sanad 26489, Kingdom of BahrainAdministrative Science Department, College of Administrative and Financial Science, Gulf University, Sanad 26489, Kingdom of BahrainDepartment of Finance and Accounting, College of Business Administration, Kingdom University, Riffa, 40434, Kingdom of BahrainCryptocurrencies have emerged as a transformative force across various sectors of the global economy, particularly in financial markets, where they influence asset classes and market dynamics. In this context, Asia's leadership in both cryptocurrency adoption and Islamic finance provides a unique opportunity to assess whether Islamic stock markets outperform their conventional counterparts amid cryptocurrency volatility. This study employs advanced econometric techniques, including panel unit root tests, Johansen-Fisher cointegration, pairwise Granger causality tests, and regression analysis, to empirically examine the influence of cryptocurrencies on the performance of Islamic and conventional stocks. Weekly data from 13 Asian countries spanning 2016–2019 are analyzed, with a focus on two distinct periods: before and after the 2017–2018 cryptocurrency crash. The findings reveal bidirectional significant causality between conventional stock returns and cryptocurrency returns. In contrast, Islamic stock returns exhibit a unidirectional influence on cryptocurrency prices, with no reciprocal effect observed across all panels. The findings indicate that during both overall and pre-crash periods, cryptocurrency returns positively affect Islamic and conventional stock markets, with Islamic indices experiencing a stronger impact. However, post-crash, both conventional and Islamic stocks suffer negative consequences from cryptocurrency fluctuations, with conventional stocks experiencing more pronounced losses, while Islamic stocks display greater resilience. This suggests that investor sentiment and risk appetite in Islamic markets differ from those in conventional markets, particularly during periods of cryptocurrency instability. Overall, our findings indicate that rising cryptocurrency returns, especially post-crash, may divert investors from stock markets across Asia, with conventional markets being more affected than Islamic markets. The study offers valuable insights for investors, policymakers, and regulators, emphasizing that conventional stock market investors face greater exposure to cryptocurrency risks. It advocates for the implementation of robust policies to mitigate these risks and recommends expanding future research to encompass other regions and incorporate additional control variables.http://www.sciencedirect.com/science/article/pii/S2590291125002001E44F65G15O31 |
| spellingShingle | Naji Mansour Nomran Razali Haron Abdelkader Laallam Ali Ateeq Mohammed Alzoraiki Marwan Milhem Joji Abey Do Islamic stock markets outperform conventional markets when facing cryptocurrency threats? Empirical evidence from Asian countries Social Sciences and Humanities Open E44 F65 G15 O31 |
| title | Do Islamic stock markets outperform conventional markets when facing cryptocurrency threats? Empirical evidence from Asian countries |
| title_full | Do Islamic stock markets outperform conventional markets when facing cryptocurrency threats? Empirical evidence from Asian countries |
| title_fullStr | Do Islamic stock markets outperform conventional markets when facing cryptocurrency threats? Empirical evidence from Asian countries |
| title_full_unstemmed | Do Islamic stock markets outperform conventional markets when facing cryptocurrency threats? Empirical evidence from Asian countries |
| title_short | Do Islamic stock markets outperform conventional markets when facing cryptocurrency threats? Empirical evidence from Asian countries |
| title_sort | do islamic stock markets outperform conventional markets when facing cryptocurrency threats empirical evidence from asian countries |
| topic | E44 F65 G15 O31 |
| url | http://www.sciencedirect.com/science/article/pii/S2590291125002001 |
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