Journal of Islamic Business and Management

Lunar Calendar and Ramadan Effect on Performance of Mutual Funds in Pakistan

Muhammad Ashraf and Muhammad Ismail Ramay
Published Online: June 2016
DOI: 10.1111/jibm

This paper is primarily intended to find out the effect of the lunar calendar with the special focus of the holy month of Ramadān on the performance of mutual funds in Pakistan. Economic activity in Pakistan takes a different turn due to observation of Siyām (fasting) and shorter working hours in the country in the month of Ramadān. People are generally more tilted towards the religious and spiritual activities in this month. The paper uses the logit model to study the impact of lunar calendar generally and the holy month of Ramadān specifically, on the net asset values of the mutual funds – an important category of Islamic capital market. The study confirms the low expected growth of net asset value in the month of Ramadān and the other periods of the religious sentiment like Dhū al-Hajjah in the case of Islamic mutual funds. In case of conventional (interest based) mutual funds, however, net asset value of the Funds depicted phenomenal growth. Economic activity regains its pace after Ramadān and Dhū al-Hajjah as this is evident from the likelihood increase of net asset value of the Islamic mutual funds in the month of Shawwāl & Muharram, the months following Ramadān and Dhū al-Hajjah respectively. In contrast, growth in conventional mutual funds is not much influenced by the periods of religious sentiment.


Mutual funds’ Performance; Net Asset Value; Lunar Calendar; Ramadān Effect.