Economic and political factors on herding in Islamic GCC stock markets during COVID-19 pandemic

Ooi Kok Loang, Zamri Ahmad
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Abstract

Purpose This study aims to examine the existence of herding and the impact of economic and political factors in the Shariah-compliant stocks of Gulf Cooperation Council markets, namely, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates. This study also seeks to explore the existence of herding under market stress and cross-stocks herding between Shariah-compliant and conventional stocks. Design/methodology/approach The data period is from 1 January 2016 to 31 December 2021. Panel data regression and panel quantile regression are used to examine herding. Findings The results show that herding tends to exist in Shariah stocks before the pandemic but is more pronounced in both types of stocks during the pandemic. The empirical evidence shows that economic factors are significant to herding before and during pandemic, whereas the political factors are only shown to be significant before COVID-19. Conventional stocks are correlated to the herding of Shariah stocks but the Shariah stocks have no significant impact on the herding of conventional stocks. Panel quantile regression shows that herding exists in extreme conditions but not all markets perform similarly. Originality/value The results of this study imply that the political factor can lead investors to herd. This political factor represents information that is used by investors to herd, consistent with the prediction of information-based theory of herding. Hence, policymakers and regulators need to be wary of any change in the political factors as they may cause movement in stock prices that deviate from fundamental value because of investor herding.
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新冠肺炎大流行期间伊斯兰海湾合作委员会股票市场羊群行为的经济和政治因素
本研究旨在考察海湾合作委员会市场(即巴林、科威特、阿曼、卡塔尔、沙特阿拉伯和阿拉伯联合酋长国)伊斯兰教合规股票中是否存在放牧行为以及经济和政治因素的影响。本研究也试图探讨市场压力下羊群的存在,以及符合伊斯兰教法的股票与传统股票之间的跨股票羊群。数据期为2016年1月1日至2021年12月31日。使用面板数据回归和面板分位数回归来检验羊群。结果表明,在大流行之前,放牧倾向于存在于伊斯兰教的种群中,但在大流行期间,两种类型的种群中放牧更为明显。经验证据表明,经济因素在大流行之前和期间对放牧具有重要意义,而政治因素仅在COVID-19之前被证明具有重要意义。传统股票与伊斯兰教股票的放牧相关,但伊斯兰教股票对传统股票的放牧没有显著影响。面板分位数回归显示,羊群效应在极端条件下存在,但并非所有市场的表现都相似。原创性/价值本研究的结果表明,政治因素会导致投资者从众。这一政治因素代表了投资者用来羊群的信息,与基于信息的羊群理论的预测相一致。因此,政策制定者和监管机构需要警惕政治因素的任何变化,因为它们可能会因投资者的羊群效应而导致股价偏离基本价值。
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来源期刊
CiteScore
5.40
自引率
10.00%
发文量
45
期刊介绍: The International Journal of Islamic and Middle Eastern Finance and Management (IMEFM) publishes quality and in-depth analysis on current issues within Islamic and Middle Eastern finance and management. The journal welcomes strong evidence-based empirical studies and results-focused case studies that share research in product development and clarify best practices. The title is also keen to consider work from emerging authors. IMEFM has just also accepted into Clarivate''s SSCI in 2018, and its IF will be available in summer 2019, with citations dating from 2016. The coverage includes but is not limited to: -Islamic finance: Fundamentals, trends and opportunities in Islamic Finance, Islamic banking and financial markets, Risk management, Corporate finance, Investment strategy, Islamic social finance, Financial planning, Housing finance, Legal and regulatory issues, -Islamic management: Corporate governance, Customer relationship management and service quality, Business ethics and corporate social responsibility, Management styles and strategies in Shariah environments, Labour and welfare economics, Political economy. The journal is the only title aiming to give an interdisciplinary and holistic view on Islamic finance and business management practices in order to inform these two intertwined communities.
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