Special Issue Call for Papers: Islamic behavioral finance
Special issue call for papers from International Journal of Islamic and Middle Eastern Finance and Management
Mamunur Rashid, PhD
Assistant Professor in Finance, University of Nottingham Malaysia Campus
Email: [email protected]
Assistant Professor of Banking and Finance, University of Udine, Italy
Email: [email protected]
Purpose of this special issue
There are handful of special issues on Islamic finance these days. Most recent issues cover a wide array of subjects including Islamic financial systems, economic development, Islamic economic life, and in most recent days, Islamic corporate finance. Since its formal inception in the 60s’ in oil rich Middle Eastern countries, Islamic financial system has been unfolded into several dimensions and into Muslim as well as non-Muslim majority countries in Asia, Europe, and Africa. Majority of the published studies have tested the suitability of Islamic financial system against its conventional counterpart with respect to the laws laid down in Islamic Shari’ah. Shortage of efficient human capital, limited Shari’ah compliant market-friendly instruments, and limited awareness are broadly the challenges of this system.
As the industry is relatively emerging, prior studies have reported significant non-compliance with the rules of Shari’ah. Consequently, there has been a clear trend of these published studies that come across two major dimensions – compliance to Islamic Shari’ah and strategies to make it more user-friendly as Shari’ah compliant. Significant attention has been given into the development of fundamental rules to guide investment and financial policies. However, differences in schools of thoughts, regulatory limitations, and gaps in consumer education and awareness have led to significant bias at the consumer, regulatory and corporate levels.
Last fifty years of academic research on financial markets establish that value of financial assets in the market do not represent their true values due to several individual and group-related biases. At the individual level, investors over- and under-react to news, they have been overconfident and sentimental, and mostly irrational decision makers. At the collective level, investors have moved in groups, given importance to social and peer factors over rationality, and preferred short-run gain over long-run growth. Behavioural biases exist even at the corporate level. Global evidences on the persistence of asymmetric information theory, agency theory, market timing theory, and over- and under-investment hypotheses establish consistent violation of rational decision-making at the corporate level. Corporate managers are found to be overconfident and overly optimistic while considering new investment and raising new capital.
Islamic Shari’ah is the yardstick to decide the rationalism in Islamic financial system. Anything beyond Shari’ah is considered non-permissible. Hence, financial decisions, both at the individual/retail as well as corporate levels, would be irrational, and consequently un-Islamic, if these are guided by rumors, and personal and collective biases. Some recent studies have opened new rooms for research on investor sentiment in Islamic financial markets, significance of short-term profit gaining through momentum strategies in Islamic funds markets, and the presence of overly optimistic (pessimistic) Islamic retail equity investors. The objective of this special issue is to expand on these studies to investigate the influence of behavioral finance theories and concepts on Islamic finance in retail as well as corporate decision domains.
Scope of the issue:
We are inviting original contributions on Islamic behavioural finance covering the following research topics:
* Financial market anomalies and Islamic equities
* Personality traits and decisions in Islamic finance
* Overconfident investors and managers in Islamic financial and corporate systems
* Prospect theory, representativeness and loss aversion among Islamic investors.
* Underpricing of Shari’ah compliant IPOs
* Momentum, herding, under- and over-reaction in Islamic equity markets
* Framing, perception and attention bias
* Islamic values and investment decision
* Behavioural biases and their explanations from the Shari’ah
* Islamic emotional intelligence
* Modelling financial belief system in Islamic finance
* Individual versus collective Islamic financial principles
Authors are required to submit their manuscript via ScholarOne by the 31st of August 2017 at:
https://mc.manuscriptcentral.com/imefm. Authors interested in publishing in the journal are asked to first review the journal’s guidelines and policies at http://www.emeraldgrouppublishing.com/imefm.htm
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