%0 Journal Article
%T Risk and Return under ShariĄŻa Framework: An Attempt to Develop ShariĄŻa Compliant Asset Pricing Model (SCAPM)
%A Muhammad Hanif
%J Pakistan Journal of Commerce and Social Sciences
%D 2011
%I Johar Educational Society
%X A speedy emerging area of finance is the ShariĄŻa compliant financial system. In first decade of 21st century Islamic financing has shown tremendous increase and global volume has reached to US $ 1,041 billion by the end of 2009. Being financial intermediaries Islamic Financial Institutions (IFIs) have shown commendable progress in deposit collection under profit and loss sharing schemes however investment avenues are limited in comparison of conventional banks. Although a large number of financing modes are available to IFIs, yet maintenance of required liquidity is serious issue because money market and capital market is dominated by interest based instruments and conventional practices (some are clearly prohibited by ShariĄŻa). Recently Al-meezan Investment Management Ltd. (AIML) has started screening of ShariĄŻa compliant stocks on KSE, and provided an avenue for ShariĄŻa Compliant Investors/IFIs to invest in equities. This study is conducted to understand conventional asset pricing models, document any mismatching with ShariĄŻa financial system, and suggest amendments if required. Findings suggest existing models of equity pricing (CAPM, APT/MFM) are very much practicable under ShariĄŻa framework with slight modification of risk free return because under ShariĄŻa frame work risk free returns do not exist.
%K SCAPM
%K Islamic financing
%K APT
%K Security pricing
%K valuation
%U http://www.jespk.net/publications/61.pdf