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

Hearn, Bruce, Piesse, Jenifer and Strange, Roger (2012) Islamic finance and market segmentation: implications for the cost of capital. International Business Review, 12 (1). pp. 102-113. ISSN 0969-5931

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Abstract

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.

Item Type: Article
Schools and Departments: School of Business, Management and Economics > Business and Management
Subjects: H Social Sciences > HG Finance > HG3810 Foreign exchange. International finance. International monetary system
H Social Sciences > HG Finance > HG4001 Finance management. Business finance. Corporation finance
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Depositing User: Bruce Hearn
Date Deposited: 23 Apr 2012 14:23
Last Modified: 07 Mar 2017 05:57
URI: http://sro.sussex.ac.uk/id/eprint/38188

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