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Quantifying the impact of Ramadan on global raw sugar prices

Kazi Abrar Hossain (Standard Chartered Bank, Dhaka, Bangladesh)
Syed Abul Basher (Department of Economics, East West University, Dhaka, Bangladesh)
A.K. Enamul Haque (Department of Economics, East West University, Dhaka, Bangladesh)

International Journal of Islamic and Middle Eastern Finance and Management

ISSN: 1753-8394

Article publication date: 27 June 2018

Issue publication date: 26 September 2018

517

Abstract

Purpose

The purpose of this study is to quantify the impact of Ramadan on both the level and the growth of global raw sugar price.

Design/methodology/approach

The study uses a dummy and a fractional variable to capture Ramadan to overcome the asynchronicity of time between Ramadan fasting (which is based on the Islamic lunar calendar) and the movement in prices (which follows the Gregorian solar calendar). To capture the seasonality of sugar production, the data on sugar price span 34 years so that the Islamic calendar makes a complete cycle of the Gregorian calendar. The empirical model is estimated using both autoregressive integrated moving average model and unobserved components model.

Findings

The results show that monthly raw sugar prices in the global market increases by roughly 6.06 per cent (or $17.78 per metric ton) every year ahead of Ramadan.

Practical implications

The study illustrates the implications of the results for the consumption of imported sugar in Bangladesh.

Originality/value

The study uses a broader set of Ramadan indicators in its empirical models and checks the robustness of its baseline model using the unobserved components model. It also performs seasonal unit root tests on the global raw sugar prices.

Keywords

Acknowledgements

We thank two anonymous reviewers and seminar participants at East West University for helpful comments and suggestions. This is an abridged version of Kazi’s masters thesis, East West University, 2015. The views expressed here are authors’ own and do not necessarily reflect the views of the affiliated institutions.

Citation

Hossain, K.A., Basher, S.A. and Haque, A.K.E. (2018), "Quantifying the impact of Ramadan on global raw sugar prices", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 11 No. 4, pp. 510-528. https://doi.org/10.1108/IMEFM-05-2017-0132

Publisher

:

Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited

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