Shariah-compliant equities: Empirical evaluation of performance in the European market during credit crunch

Nafis Alam, Mohammad Shadique Rajjaque

Research output: Contribution to journalArticleResearchpeer-review

49 Citations (Scopus)


Islamic finance is based on the Islamic Jurisprudence as prescribed by the Shariah, and has witnessed significant growth and development in the recent decades. During the period of economic slowdown and following the financial crisis during FY 2007-2009, it was claimed that Islamic financial system seemed to be better in coping with economic slowdowns than conventional financial systems. The article analyses whether the same holds true for Shariah-compliant equities in the market, that is, whether Shariah-compliant equities perform better in the market as compared to the general market. Three portfolios are constructed based on the constituents of SP Europe 350 to represent the overall market, the market without the financial firms and the market of Shariah-compliant equities. It is found that the portfolio of Shariah-compliant equities outperforms the other two portfolios in all aspects of analysis. However, it slightly underperforms the market portfolio when there is an upward growth trend in the economy. The findings of this article are very relevant for policymakers, investors and fund managers to determine policy matters, deciding on investment and marketing strategy for Islamic capital market products.

Original languageEnglish
Pages (from-to)228-240
Number of pages13
JournalJournal of Financial Services Marketing
Issue number3
Publication statusPublished - Dec 2010


  • capital market
  • financial crisis
  • Islamic finance
  • Shariah-compliant equities

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