Speaker
Description
ISLAMIC HOLIDAYS EFFECT ON STOCK MARKET PERFORMANCE: A COMPREHENSIVE LITERATURE REVIEW
ARIQAH NABILA BINTI ADAMa, & RICKY CHIA CHEE JIUNa*
aLabuan Faculty of International Finance, Universiti Malaysia Sabah, Malaysia
ABSTRACT
This study presents a comprehensive literature review of the influence of Islamic calendar events—both holiday and non-holiday—on stock market performance. With increasing attention to behavioral finance and market anomalies, the study explores how Islamic religious events like Eid ul-Fitr, Eid ul-Adha, Ramadan, Maal Hijrah, Eid Milad-un-Nabi, and Ashura affect investor sentiment, trading behavior, and stock returns. The review highlights that while some Islamic holidays lead to positive abnormal returns due to increased optimism and consumption, others yield mixed or negligible effects depending on the market, index type, and regional culture.
The study analyzed 33 peer-reviewed articles using a structured review method, categorizing findings by event type, geographical region, index, methodology, and outcome. It reveals that Eid ul-Fitr and Ramadan tend to have stronger and more consistent market impacts compared to lesser-studied events like Ashura and Maal Hijrah. The study further discusses the role of Shariah-compliant indices and the moderating effects of religious sentiment, ethical investment behavior, and institutional constraints.
The findings suggest that Islamic holidays create time-bound market inefficiencies driven by sentiment and cultural behavior, challenging the Efficient Market Hypothesis. Implications are significant for investors, financial analysts, and policymakers in Muslim-majority markets. The study also identifies key research gaps, such as limited behavioral finance integration, inconsistent methodologies, and insufficient focus on underrepresented Islamic holidays. It proposes future studies incorporate more advanced econometric models, cross-market comparisons, and a broader set of indices to better understand the nuanced effects of religious events on financial markets.
Keywords: Islamic calendar; stock returns; investor sentiment; market anomaly; behavioral finance
*Corresponding author: Ricky Chia Chee Jiun, Labuan Faculty of International Finance, Universiti Malaysia Sabah, Labuan International Campus, 87000 Labuan F.T., Malaysia. Email: ricky_82@ums.edu.my
