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- W2805152114 abstract "Purpose The purpose of this paper is to investigate the ability of the Islamic gold dinar to hedge against two well-established foreign exchange (FX) risk factors namely, the dollar risk factor and global FX volatility innovations. Design/methodology/approach The paper uses a combination of the Markowitz (1952) portfolio optimization, visual data representations and the classic Fama-Macbeth (1973) two-pass procedure regressions. Findings The findings show that the Islamic gold dinar can serve as a hedge against market volatility, outperforms a diversified currency portfolio, and through its inclusions into the diversified currency portfolio, improve said portfolio’s ability to hedge against market volatility. Research limitations/implications Due to the spread of the sample, country-specific factors could not be taken into account. Practical implications The Islamic gold dinar is a cost-efficient, cost-effective, and Shariah-compliant instrument that provides a solid hedge for investors and/or firms that have financial positions denominated in foreign currencies. Should these investors or firms find it costly to maintain a dinar-only portfolio, including the dinar into their currency portfolios also provides the same benefit, albeit at a lower magnitude. Originality/value This study is timely as the Accounting and Auditing Organization for Islamic Financial Institutions has recently for the first time recognized gold as a Shariah-compliant investment. The findings of this study provide the first look as to how investors and firms can benefit through the use of the Islamic gold dinar in their risk management practices." @default.
- W2805152114 created "2018-06-13" @default.
- W2805152114 creator A5009029543 @default.
- W2805152114 date "2018-06-07" @default.
- W2805152114 modified "2023-09-25" @default.
- W2805152114 title "The Islamic gold dinar: a hedge against exchange rate volatility" @default.
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- W2805152114 doi "https://doi.org/10.1108/mf-12-2016-0351" @default.
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