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New Findings from University of Newcastle Update Understanding of Economic Modelling (Are Dow Jones Islamic equity indices exposed to interest rate...

July 4, 2014



New Findings from University of Newcastle Update Understanding of Economic Modelling (Are Dow Jones Islamic equity indices exposed to interest rate risk?)

By a News Reporter-Staff News Editor at Economics Week -- Current study results on Economic Modelling have been published. According to news reporting from Callaghan, Australia, by VerticalNews editors, the research stated, "The Dow Jones Islamic Market indices (DJIMI) are constructed by screening out stocks that are incompatible with Islam's prohibition of interest and certain lines of business. However, as a blunt instrument, the interest rate can affect discounted cash flows of any firm, even a firm with no financial leverage."

The news correspondents obtained a quote from the research from the University of Newcastle, "This study reveals that the aggregate portfolio of Islamic stocks is immune to interest rate risk. However, at the sectoral level some Islamic equity portfolios demonstrate exposure to interest rate risk. Overall, evidence of interest rate risk exposure is less pronounced among Islamic sector portfolios than that of their mainstream counterparts the Dow Jones World sector indices."

According to the news reporters, the research concluded: "The results also hold when interest rate risk is assessed in terms of the sensitivity of the DJIMI return to changes in level, slope and curvature of the interest rate term structure."

For more information on this research see: Are Dow Jones Islamic equity indices exposed to interest rate risk? Economic Modelling, 2014;39():273-281. Economic Modelling can be contacted at: Elsevier Science Bv, PO Box 211, 1000 Ae Amsterdam, Netherlands. (Elsevier - www.elsevier.com; Economic Modelling - www.elsevier.com/wps/product/cws_home/30411)

Our news journalists report that additional information may be obtained by contacting A. Shamsuddin, University of Newcastle, Newcastle Business Sch, Callaghan, NSW 2308, Australia.

Keywords for this news article include: Callaghan, Economic Modelling, Australia and New Zealand

Our reports deliver fact-based news of research and discoveries from around the world. Copyright 2014, NewsRx LLC


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Source: Economics Week


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