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Islamic finance and market segmentation: implications for the cost of capital

journal contribution
posted on 2023-06-08, 11:02 authored by Bruce Hearn, Jenifer Piesse, Roger StrangeRoger Strange
This paper considers the impact of full Islamic shari’ya compliance on developing stock exchanges in their effective provision of development capital. Evidence from a unique study focussing on the Sudan telecommunications company and its listings on the Khartoum as well as Arabian Gulf stock exchanges reveals that costs of capital are considerably higher in the former than latter markets. While there are firm governance benefits arising from Islamic finance monitoring costs are substantial and the banking system is better placed to administer financing arrangements. Larger firms are better placed to circumvent this segmentation through cross-listing on regional exchanges.

History

Publication status

  • Published

File Version

  • Published version

Journal

International Business Review

ISSN

0969-5931

Publisher

Elsevier

Issue

1

Volume

12

Page range

102-113

Department affiliated with

  • Business and Management Publications

Full text available

  • No

Peer reviewed?

  • Yes

Legacy Posted Date

2012-04-23

First Compliant Deposit (FCD) Date

2012-02-24

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