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Fast profits: Investor sentiment and stock returns during Ramadan

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  • Białkowski, Jędrzej
  • Etebari, Ahmad
  • Wisniewski, Tomasz Piotr

Abstract

Observed by more than 1.5 billion Muslims, Ramadan is one of the most celebrated religious traditions in the world. We investigate stock returns during Ramadan for 14 predominantly Muslim countries over the years 1989–2007. The results show that stock returns during Ramadan are significantly higher and less volatile than during the rest of the year. No discernible declines in market liquidity are recorded. We find these results consistent with a notion that Ramadan positively affects investor psychology, as it promotes feelings of solidarity and social identity among Muslims world-wide, leading to optimistic beliefs that extend to investment decisions.

Suggested Citation

  • Białkowski, Jędrzej & Etebari, Ahmad & Wisniewski, Tomasz Piotr, 2012. "Fast profits: Investor sentiment and stock returns during Ramadan," Journal of Banking & Finance, Elsevier, vol. 36(3), pages 835-845.
    • Handle: RePEc:eee:jbfina:v:36:y:2012:i:3:p:835-845
    DOI: 10.1016/j.jbankfin.2011.09.014
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    More about this item

    Keywords

    Ramadan effect; Behavioral finance; Market efficiency; Religion;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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