Ulussever, TalatDoruk, Omer TugsalErtugrul, Hasan MuratTekdogan, Omer Faruk2026-02-272026-02-2720252662-999210.1057/s41599-025-05001-9http://dx.doi.org/10.1057/s41599-025-05001-9https://hdl.handle.net/20.500.14669/4557This study undertakes an examination of financial leverage, synonymous with firm risk or capital structure, within the context of Shariah-compliant firms. Analyzing firm-level data covering 500 nonfinancial firms across 9 MENA countries, this research employs a time-varying quasi-experimental approach to delve into the primary objective of assessing the comparative financial leverage or capital structure of Shariah-compliant firms concerning their non-Shariah counterparts. We employ time-varying quasi-experimental methods, namely time-varying difference-in-differences methodology, to explore the relative time-varying effect of Shariah-compliance on the firm leverage in the MENA Region. The results unequivocally highlight a distinct trend that the Shariah-compliant firms exhibit notably lower financial leverage compared to their non-Shariah counterparts, even if we consider the time-varying Shariah-compliance dimension. These findings, substantiated through robust modeling techniques, offer compelling insights into the financial dynamics and risk profiles of Shariah-compliant entities across the MENA region.eninfo:eu-repo/semantics/openAccessArticle112WOS:001580397200007