Impact of Heterogeneity in The Investment Horizons on Portfolio Diversification; impact of Islamic finance on the growth of agribusiness and small and medium-sized enterprises (SMEs) in Pakistan’ An Empirical Analysis in the Perspective of Pakistani Investors
Keywords:
International portfolio diversification, short term investment, horizons and long term investment horizonsAbstract
This study investigated the impact of Islamic finance on the growth of agribusiness and small and medium-sized enterprises (SMEs) in Pakistan. This study involved the empirical analysis of four stock markets to give Pakistani investors the most reliable information related to their investment in these stock markets. The period of 2013 to 2019 was selected for the investigation, and in this research, the most reliable and modern techniques are used for analysis. Those techniques are MGARCH-DCC and CWT. Analysis was done using the software MATLAB and Microfit 5.5. This software has provided us with results based on the settled objectives, such as whether the stock markets of China, India, and Bangladesh benefit Pakistani investors if they diversify their investment portfolios in these stock markets. Another objective included analyzing which type of investment horizon (short-term or long-term) is more suitable for these investors to get the higher international portfolio diversification benefits. To evaluate whether Pakistani investors should invest in Bangladesh, China, or Indian stock exchanges to obtain international portfolio diversification advantages, it is seen that investing in the Chinese stock market would be a better option for Pakistani investors. To investigate whether international portfolio diversification benefits change given different investor stockholding periods analysis through CWT confirms that there seem to be yellow spots in the series of short-term investment horizons (e.g., four to eight days, eight to sixteen days) in all three stock markets separately indicating that there are more benefits in investing for short term investment horizons ignoring the long term one because there seems no any evidence or correlations in the figures regarding investment in long term horizons.
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