Islamic Stock Indices: An Overview

Authors : Amal ESSAYEM, Şakir GÖRMÜŞ

Pages : 1-8

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Publication Date : 2023-06-09

Article Type : Review Paper

Abstract :This article contributes to the ongoing debate and mixed findings in the literature regarding the potential diversification benefits of Islamic stock indices by investigating the reasons behind this contradictive evidence, as it raises important questions regarding the establishment and development of Islamic stock indices. The lack of a comprehensive overview of the genesis of Islamic stock indices, the different Sharia screening processes and the issues related to these screening processes represent one of the main reasons behind the low diversification opportunity. The authors investigate the current Sharia screening criteria for Islamic indices and critically analyse their performance. They provide a historical overview of Islamic indices, followed by an explanation of the basics of Sharia screening and its main issues. The authors conclude that effective diversification necessitates significant changes to Islamic financial instruments, especially considering the ongoing convergence of the Islamic and conventional markets. These changes include the standardization of screening criteria, a comprehensive statement outlining the methodologies utilized, and the alignment of ethical screening with existing normative frameworks.
Keywords : Fıkhi filtreleme, İslami Katılım Endeksi, islami finans