Open AccessDeterminants of Macroeconomic Variables on Islamic Stock Index: Evidence from Frontier Market
Author(s) -
Noor Hafizha Muhamad Yusuf,
Natasha Aliana Muhamad Hilmi,
Wan Mohd Yaseer Mohd Abdoh,
Rozihanim Shekh Zain,
Noor Sharida Badri Shah
Publication year - 2020
Publication title -
journal of international business, economics and entrepreneurship
Language(s) - English
Resource type - Journals
ISSN - 2550-1429
DOI - 10.24191/jibe.v5i1.14288
Subject(s) - economics , money supply , exchange rate , monetary economics , gross domestic product , frontier , index (typography) , inflation (cosmology) , stock market , consumer price index (south africa) , interest rate , stock market index , financial economics , macroeconomics , monetary policy , history , paleontology , physics , archaeology , horse , biology , world wide web , computer science , theoretical physics
This paper provides useful insights on the determinants of macroeconomic variables on Islamic stock index evidence from frontier market. The aims of this study is to examine the effect of macroeconomic variables namely gross domestic product (GDP), inflation (consumer price index), exchange rate (USD exchange rate), oil price (crude palm oil) and money supply (M2) on frontier market Islamic index (FMII). This study employs Fixed Effect (FE) model of 17 countries listed under FMII. The study cover a ten (10) years period from 2008 until 2017. The study have shown significant relationship between inflation, money supply and exchange rate with FMII and managed to reject null hypotheses for the three variables. Inflation and exchange rate is negatively related with FMII while money supply, gross domestic product and oil price is positively related to FMII. However, the study fails to find any significant relationship between gross domestic product and oil price with FMII. The findings of this study will provide better understanding on the frontier market and helps to improve their performance. Therefore, it can encourage countries in frontier market to be able to compete and achieve similar advancement as countries in developed and emerging market did.