Pricing of Islamic Assets Based on Mean-Gini

Abstract

With the emergence of ethical finance, Islamic finance has gained increasing significance as an investment option. This trend is not only observed in the predominantly Islamic countries but also in the finance industry in the West. This paper introduces the Mean Gini Sharī’ah Capital Asset Pricing Model (MG-SCAPM) for pricing Islamic assets. The proposed model incorporates key variables recommended in Islamic finance, such as zakāh, inflation rate, GDP rate, and Ṣukūk rate, as alternatives to the risk-free rate. Furthermore, a practical example is provided to demonstrate the implementation of MG-SCAPM and to aid Islamic investors in selecting the optimal model. In fact, based on our chosen data, the model that substitutes the risk-free rate with zakāh appears to be the most suitable for the current application.