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Sectoral Islamic finance and uncertainties: The role of different market condition

Author

Listed:
  • Li, Boxun
  • Rehman, Mobeen Ur
  • Raheem, Ibrahim D.
  • Oyewole, Oluwatomisin J.
  • Raheem, Mufutau I.

Abstract

This study examines the nonlinear and asymmetric causal effects of global uncertainty on sectoral Islamic equity markets using a nonparametric causality in quantiles approach. Drawing on monthly data from January 1996 to December 2023, we analyse the sensitivity of ten Dow Jones Islamic Market sectors and the aggregate index to three key uncertainty measures: Geopolitical Risk (GPR), Economic Policy Uncertainty (EPU), and oil market volatility (OVX). Our results uncover significant cross-sectoral heterogeneity. Consumer Goods, Industrials, and Oil and Gas sectors exhibit heightened vulnerability to uncertainty shocks, particularly in extreme quantiles, while Health and Utilities display relative resilience. These findings challenge the assumption of homogeneity in Islamic finance and underscore the importance of disaggregated analysis and nonlinear methods in capturing the complex dynamics of Shariah-compliant markets. These results have important implications for policymakers, regulators, portfolio managers, and investors.

Suggested Citation

  • Li, Boxun & Rehman, Mobeen Ur & Raheem, Ibrahim D. & Oyewole, Oluwatomisin J. & Raheem, Mufutau I., 2026. "Sectoral Islamic finance and uncertainties: The role of different market condition," International Review of Economics & Finance, Elsevier, vol. 107(C).
    • Handle: RePEc:eee:reveco:v:107:y:2026:i:c:s1059056026002133
    DOI: 10.1016/j.iref.2026.105100

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    Keywords

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    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion

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