The Dow Jones Islamic Market Index (DJIM), is a stock market
index
Index (: indexes or indices) may refer to:
Arts, entertainment, and media Fictional entities
* Index (''A Certain Magical Index''), a character in the light novel series ''A Certain Magical Index''
* The Index, an item on the Halo Array in the ...
created for investors seeking investments using
Islamic finance
Islamic banking, Islamic finance ( ''masrifiyya 'islamia''), or Sharia-compliant finance is banking or financing activity that complies with Sharia (Islamic law) and its practical application through the development of Islamic economics. Some ...
in compliance with
Muslim
Muslims () are people who adhere to Islam, a Monotheism, monotheistic religion belonging to the Abrahamic religions, Abrahamic tradition. They consider the Quran, the foundational religious text of Islam, to be the verbatim word of the God ...
Sharia
Sharia, Sharī'ah, Shari'a, or Shariah () is a body of religious law that forms a part of the Islamic tradition based on Islamic holy books, scriptures of Islam, particularly the Quran, Qur'an and hadith. In Islamic terminology ''sharīʿah'' ...
law.
The DJIM indices use a screening process to identify companies that are compliant with Shariah law. The screening process is conducted by an independent Shariah Supervisory Board (SSB) that consists of Islamic scholars and experts in Islamic finance. The SSB reviews the financial statements of each company and determines whether it meets the Islamic finance criteria.
History
The Dow Jones Islamic Market Index was launched in 1999 in Bahrain, and was the first index created for investors seeking investments in compliance with
lwakhi.
Operations
The DJIM has an independent Shari’ah (Islamic Law) Supervisory Board. The DJIM screens have been adopted by the
Accounting and Auditing Organization for Islamic Financial Institutions ("AAOIFI")-Standard 21.
The DJIM measure the performance of a global universe of investable equities that have been screened for Shari’ah compliance consistent with Dow Jones Indexes’ methodology. The selection universe for the DJIM family of indexes is the same as the universe for the Dow Jones World Index, a broad-market index that seeks to provide approximately 95% market coverage of 44 countries.
The first level of DJIM screening removes companies involved in industries related to
alcohol
Alcohol may refer to:
Common uses
* Alcohol (chemistry), a class of compounds
* Ethanol, one of several alcohols, commonly known as alcohol in everyday life
** Alcohol (drug), intoxicant found in alcoholic beverages
** Alcoholic beverage, an alco ...
,
pork
Pork is the culinary name for the meat of the pig (''Sus domesticus''). It is the most commonly consumed meat worldwide, with evidence of pig animal husbandry, husbandry dating back to 8000–9000 BCE.
Pork is eaten both freshly cooke ...
-related products, conventional
financial services
Financial services are service (economics), economic services tied to finance provided by financial institutions. Financial services encompass a broad range of tertiary sector of the economy, service sector activities, especially as concerns finan ...
(e.g.
bank
A bank is a financial institution that accepts Deposit account, deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital m ...
s and
insurance companies
Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to protect ...
),
entertainment
Entertainment is a form of activity that holds the attention and Interest (emotion), interest of an audience or gives pleasure and delight. It can be an idea or a task, but it is more likely to be one of the activities or events that have deve ...
(e.g.
hotel
A hotel is an establishment that provides paid lodging on a short-term basis. Facilities provided inside a hotel room may range from a modest-quality mattress in a small room to large suites with bigger, higher-quality beds, a dresser, a re ...
s,
casino
A casino is a facility for gambling. Casinos are often built near or combined with hotels, resorts, restaurants, retail shops, cruise ships, and other tourist attractions. Some casinos also host live entertainment, such as stand-up comedy, conce ...
s,
gambling
Gambling (also known as betting or gaming) is the wagering of something of Value (economics), value ("the stakes") on a Event (probability theory), random event with the intent of winning something else of value, where instances of strategy (ga ...
etc.),
tobacco
Tobacco is the common name of several plants in the genus '' Nicotiana'' of the family Solanaceae, and the general term for any product prepared from the cured leaves of these plants. More than 70 species of tobacco are known, but the ...
, and
weapon
A weapon, arm, or armament is any implement or device that is used to deter, threaten, inflict physical damage, harm, or kill. Weapons are used to increase the efficacy and efficiency of activities such as hunting, crime (e.g., murder), law ...
s and
defense
Defense or defence may refer to:
Tactical, martial, and political acts or groups
* Defense (military), forces primarily intended for warfare
* Civil defense, the organizing of civilians to deal with emergencies or enemy attacks
* Defense industr ...
. A second level of DJIM screening based on financial ratios, is intended to remove companies based on debt and interest income levels in their balance sheets.
Stocks of companies that pass both sets of screens are included in the DJIM. All other indexes in the DJIM family are created as subsets of this benchmark.
Bibliography
*Baum, Eric (2002). "Mutual Funds Report." ''
The New York Times
''The New York Times'' (''NYT'') is an American daily newspaper based in New York City. ''The New York Times'' covers domestic, national, and international news, and publishes opinion pieces, investigative reports, and reviews. As one of ...
''. October 6.
*Henry, Clement and Rodney Wilson (2004). ''The Politics of Islamic Finance''. Edinburgh: Edinburgh University Press.
See also
*
S&P Dow Jones Indices
S&P Dow Jones Indices LLC is a joint venture between S&P Global and the CME Group, that was announced in 2011 and later launched in 2012. It produces, maintains, licenses, and markets stock market indices as benchmarks and as the basis of in ...
References
{{Reflist
External links
Official Website
Ethical investment stock market indices
1999 establishments in Bahrain
Dow Jones & Company
Sharia investment