Journal of Business Ethics

, Volume 23, Issue 2, pp 145–159 | Cite as

Religion, Ethics and Stock Trading: The Case of an Islamic Equities Market

  • Shahnaz Naughton
  • Tony Naughton


Islamic banking, based on the prohibition of interest, is well established throughout the Muslim world. Attention has now turned towards applying Islamic principles in equity markets. The search for alternatives to Western style markets has been given added impetus in Muslim countries by the turmoil in Asian financial markets in 1997. Common stocks are a legitimate form of instrument in Islam, but many of the practices associated with stock trading are not. In this paper the instruments traded and the structure and practices of stock markets are examined from an Islamic perspective. Speculation is not acceptable in Islam and measures would have to be taken to control speculative trading. In addition short selling and margin trading are severely restricted. The use of stock index and equity futures and options are also unlikely to be acceptable within an Islamic market. Regulatory authorities in Muslim countries will therefore find a vast array of problems in attempting to structure a trading system that will be acceptable.


Equity Market Trading System Stock Index Short Selling Common Stock 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© Kluwer Academic Publishers 2000

Authors and Affiliations

  • Shahnaz Naughton
    • 1
  • Tony Naughton
    • 2
  1. 1.School of Marketing & ManagementGriffin
  2. 2.School of Accounting & FinanceGriffith UniversityGold CoastAustralia

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