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Shariah-compliant firms and firm leverage: evidence from firm-level time varying quasi experimental analysis for MENA countries

Author

Listed:
  • Talat Ulussever

    (Bogazici University)

  • Ömer Tuğsal Doruk

    (Adana Alparslan Türkeş Science and Technology University, Faculty of Business Administration
    GLO)

  • Hasan Murat Ertuğrul

    (Anadolu University, FEAS
    Economic Research Forum (ERF))

  • Ömer Faruk Tekdoğan

    (Social Sciences University of Ankara)

Abstract

This study undertakes an examination of financial leverage, synonymous with firm risk or capital structure, within the context of Shariah-compliant firms. Analyzing firm-level data covering 500 nonfinancial firms across 9 MENA countries, this research employs a time-varying quasi-experimental approach to delve into the primary objective of assessing the comparative financial leverage or capital structure of Shariah-compliant firms concerning their non-Shariah counterparts. We employ time-varying quasi-experimental methods, namely time-varying difference-in-differences methodology, to explore the relative time-varying effect of Shariah-compliance on the firm leverage in the MENA Region. The results unequivocally highlight a distinct trend that the Shariah-compliant firms exhibit notably lower financial leverage compared to their non-Shariah counterparts, even if we consider the time-varying Shariah-compliance dimension. These findings, substantiated through robust modeling techniques, offer compelling insights into the financial dynamics and risk profiles of Shariah-compliant entities across the MENA region.

Suggested Citation

  • Talat Ulussever & Ömer Tuğsal Doruk & Hasan Murat Ertuğrul & Ömer Faruk Tekdoğan, 2025. "Shariah-compliant firms and firm leverage: evidence from firm-level time varying quasi experimental analysis for MENA countries," Palgrave Communications, Palgrave Macmillan, vol. 12(1), pages 1-9, December.
    • Handle: RePEc:pal:palcom:v:12:y:2025:i:1:d:10.1057_s41599-025-05001-9
    DOI: 10.1057/s41599-025-05001-9
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