How does the mineral resource exploitation sector interact with Islamic and traditional ventures? Insights amidst the impact of green reforms and state-of-the-art technological advancements

Abstract

This study examines the convergence between strategic resource miners and explorers with both conventional and Islamic ventures using quantile cross-spectral analysis and the quantile connectedness approach. It analyzes data from exchange-traded funds related to these ventures from September 19, 2016, to September 14, 2023. The findings reveal significant differences between Islamic and conventional ventures. Islamic ventures show lower quantile cross-spectral coherence with natural resource miners and explorers, highlighting their inherent hedging capability, particularly in green reform-oriented and technologically advanced industries. The study identifies nuanced dynamics across various market conditions. During bear markets, evolving ventures mainly act as net transmitters to the oil and uranium industries while experiencing shocks from FinTech platforms. Conversely, conventional ventures are more vulnerable to shocks from the tech-software sector and socially conscious companies, emerging as net receivers. This dynamic shifts in normal and bull markets, with evolving ventures becoming followers of shocks and conventional ventures assuming leadership. The study also highlights specific industries impacted by both types of ventures in different market conditions, emphasizing the interplay between evolving and conventional financial strategies. Policy implications stress the need for tailored strategies that consider market conditions and industry intricacies. Promoting transparency, refining risk management tools, and fostering collaboration between Islamic finance and green industries are essential for sustainable resource governance.