nep-isf New Economics Papers
on Islamic Finance
Issue of 2021‒05‒17
three papers chosen by
Mohamed Mohamed Tolba Said

  1. Safe Haven or Hedge: Diversification Abilities of Asset Classes in Pakistan By Imran, Zulfiqar Ali; Ahad, Muhammad
  2. Making Egypt’s Post-COVID Growth Path More Sustainable By Uwe Böwer
  3. COVID-19 and Socio-Economic Inequalities in Indonesia: A Subnational-level Analysis By Aloysius Gunadi Brata; Eusebius Pantja Pramudya; Esther Sri Astuti; Heffi Christya Rahayu; Heronimus Heron

  1. By: Imran, Zulfiqar Ali; Ahad, Muhammad
    Abstract: This study compares the safe haven properties of asset classes of real estate (house, plot and residential), gold, dollar, and oil against equity returns in Pakistan for the period January 2011-December 2020. We employ the wavelet coherence to encapsulate the overall dependence and correlation of asset classes. Our results show the dependence is weaker (stronger) in short (long) term investment horizon. We also study the potential of diversification at the tail of returns distribution by applying wavelet value-at-risk (VaR) framework that reveals the degree of co-movement between gold and equity returns greatly affects the portfolio risk followed by residential property and oil. Our findings are beneficial for the individual investor, fund managers and financial advisors looking for the optimal portfolio combination that hedge the excessive negative movements in equity returns subject to the heterogeneity in the investment horizon.
    Keywords: Equity; Real Estate; Oil; Gold, US Dollar; Diversification; Pakistan.
    JEL: F21 G11 G15 Q02
    Date: 2021–04–01
  2. By: Uwe Böwer
    Abstract: Just when Egypt had achieved a hard-earned economic stabilisation and was on track towards more sustainable growth, COVID-19 threw the country back into stabilisation mode. Building on the economy’s strengthened fundamentals, swift government intervention helped mitigate the pandemic’s economic fallout, seeing the economy through the storm with resilience. However, Egypt’s growth performance has increasingly relied on extractive industries and a large role of the state in the economy. Compared to emerging market peers, Egypt might not yet be fully exploiting its catching-up growth potential. Strong population growth amid low participation rates calls for a redoubling of efforts to make Egypt’s post-COVID growth path more inclusive and sustainable, with the non-oil private sector at its core. Unleashing the private sector’s potential for growth and job creation will require a more enabling environment for trade and investment by removing non-tariff barriers and creating a level playing field for investors, including vis-à-vis public and state-connected firms. Fast-tracking the twin transition towards a digital and greener economy would capitalise on the digitalisation push ushered in by the pandemic and help Egypt to reap its large opportunities for a green and sustainable recovery.
    Keywords: Uwe Böwer, Economic analysis of Egypt’s growth drivers and medium-term growth prospects, Egypt, growth, private sector, state-owned enterprises, trade, investment, competition, digital transition, green growth.
    JEL: F13 L32 O53
    Date: 2021–05
  3. By: Aloysius Gunadi Brata (MINDSET Institute); Eusebius Pantja Pramudya (MINDSET Institute); Esther Sri Astuti (Institute for Development of Economics and Finance (INDEF)); Heffi Christya Rahayu (MINDSET Institute); Heronimus Heron (MINDSET Institute)
    Abstract: This study examines if COVID-19 has worsened socio-economic inequalities across provinces in Indonesia, and if it has affected the spatial disparity in provincial-level socio-economic indicators. Secondary provincial-level data are used from BPS for March 2015 to March 2020. Results indicate that provinces with more COVID-19 cases tend to have increased inequality in urban areas, but inequality in rural areas decreases, as measured by the Gini Index. Also, provinces with many COVID-19 cases tend to have a decrease in their poverty headcount ratios. Thus, COVID-19 may have various implications on the spatial inequality of the Gini Index and poverty headcount ratio.
    Keywords: COVID-19, inequality, poverty, spatial
    JEL: I14 I30 R10
    Date: 2021–04–22

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