IDEAS home Printed from https://ideas.repec.org/a/idn/journl/v8y2022isiap1-16.html
   My bibliography  Save this article

Can Zakat And Purification Be Employed In Portfolio Modelling?

Author

Listed:
  • Retno Subekti

    (Universitas Negeri Yogyakarta, Indonesia)

  • Abdurakhman Abdurakhman

    (Universitas Gadjah Mada, Indonesia)

  • Dedi Rosadi

    (Universitas Gadjah Mada, Indonesia)

Abstract

The Capital Asset Pricing Model (CAPM), which has interest rates in its specification, can be deemed non-Shariah compliant. Therefore, the sukuk rate has been proposed to replace these rates in CAPM. This study analyses portfolio modelling by involving two essential elements in Islamic principles, namely zakat and purification. The concept of purification has been applied in the Shariah stock selection process in Indonesia, while at the same time, zakat has been widely socialised in stock investment. The study highlights two models that consider the concept of zakat reduction and the purification factors for portfolios in the Indonesian stock market. According to the robustness tests conducted, the proposed Shariah-compliant asset pricing model developed in this study is valid. Zakat reduction and purification factor integration in mathematical models can be applied in portfolio modelling.

Suggested Citation

  • Retno Subekti & Abdurakhman Abdurakhman & Dedi Rosadi, 2022. "Can Zakat And Purification Be Employed In Portfolio Modelling?," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 8(Special I), pages 1-16, December.
    • Handle: RePEc:idn:journl:v:8:y:2022:i:sia:p:1-16
    DOI: https://doi.org/10.21098/jimf.v8i0.1418
    as

    Download full text from publisher

    File URL: https://jimf-bi.org/index.php/JIMF/article/view/1418/919
    Download Restriction: no
    File URL: https://libkey.io/https://doi.org/10.21098/jimf.v8i0.1418?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    Zakat; Purification; Shariah-CAPM; Portfolio;
    All these keywords.

    JEL classification:

    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:idn:journl:v:8:y:2022:i:sia:p:1-16. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Lutzardo Tobing or Jimmy Kathon (email available below). General contact details of provider: https://edirc.repec.org/data/bigovid.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.