The Impact of Coronavirus (COVID-19) Outbreak on Faith-Based Investments: An Original Analysis

Journal of Behavioral and Experimental Finance, Forthcoming

33 Pages Posted: 3 Jun 2020 Last revised: 5 Oct 2020

Date Written: June 3, 2020

Abstract

This paper examines the rapid spread of Coronavirus (COVID-19) and its short-term impact on the Shariah-compliant UK Dow Jones market index to capture the dynamic behavior of stock returns at economy and industry levels. Using daily data over the period January 20 to May 20 and ten UK industrial sector groupings, the findings suggest a strong and statistically significant relationship between the COVID-19 pandemic and the performance of the conventional stock market index. The findings also suggest that the disease interacts negatively but insignificantly with the Dow Jones faith-based ethical (Islamic) index compared to its UK counterpart. In addition, through an analysis of sector groupings, the paper shows that the stock returns of the information technology sector performed significantly better than the market, while stock returns of consumer discretionary sector, which includes transportation, beverages, tourism and leisure, consumer services performed significantly worse than the market during the COVID-19 outbreak. Other sector groupings fail to yield significantly plausible parameter values.

Keywords: COVID-19; Stock market indices, Faith-based ethical investments, Islamic Dow Jones index

JEL Classification: G02, G12, G17

Suggested Citation

Sherif, Mohamed, The Impact of Coronavirus (COVID-19) Outbreak on Faith-Based Investments: An Original Analysis (June 3, 2020). Journal of Behavioral and Experimental Finance, Forthcoming , Available at SSRN: https://ssrn.com/abstract=3617760

Mohamed Sherif (Contact Author)

Edinburgh Business School ( email )

Edinburgh Business School
Edinburgh EH14 4AS, Scotland
United Kingdom
0131 451 3681 (Phone)

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