HERDING BEHAVIOR IN ISLAMIC INDICES

Year 2023, Volume: 4 Issue: 2, 210 - 220, 15.10.2023

Jahanzaib Alvi , Muhammad Rehan

Abstract

This study aims to assess and identify the impact of herding behaviors on Islamic indices in various developed and developing countries within the financial market. The data used for analysis spans from January 01, 2011, to January 08, 2021, consisting of daily observations of Shariah-compliant indices. The study employs cross-sectional absolute deviation (CSAD) based on quartile deviation analysis to examine the collected data from South Africa, China, America, Canada, India, Pakistan, Sri Lanka, Malaysia, Taiwan, Thailand, Japan, Europe, Turkey, Bahrain, Doha, Dubai, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. The findings indicate the existence of herding behavior in all Islamic indices except Pakistan, Taiwan, and Doha. Notably, herding tendencies were minimal in South Africa, America, Canada, China, India, Malaysia, Sri Lanka, Thailand, Japan, Europe, Turkey, Bahrain, Dubai, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates, while stronger herding behavior was observed in Bahrain and Taiwan. This paper contributes significantly to the understanding of herding in Islamic indices, with a specific focus on certain countries. The research highlights the novel contribution of human behavior's effect on Islamic indices, emphasizing the significance of this study.

Keywords

Herding Behavior, Cross-Sectional Absolute Deviation, Quantile Regression

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