Rate of return of economics sector as benchmark pricing for Islamic Banking in Indonesia

DOI: 10.5716/978-981-08-9514-3_MME34

Authors: Sudarso Kaderi Wiryono, Oktofa Yudha Sudrajad, Ana Noveria, Barli Suryanta and Nurul Aulia Huda

Abstract:

The murabaha (mark-up sales) product is most popular in Islamic Banking Industry. To be substantially differentiated from the practice that of conventional banking i.e. interest-based, the Islamic banking products ought to have the basis to calculate the opportunity cost of capital which depend on the risk in the real economic sectors. The paper suggested the APT as proxy to model the return for three real sectors namely plantation, consumer product, and manufacture sectors represented by company stock for each sector. The factor analysis further employed to suggest the most important macroeconomic variables explaining the return for each sector.

Keywords: component: rate of return, APT, benchmark pricing, real sector