Investment Theories Assessment in an Islamic viewpoint Focusing on Iran's Economy

Orthodox economic theories imply investment takes place through interaction of real & nominal sectors of economy. This paradigm is logically confirmed from theatrical point of view. But in real world as long as interest rate is determining in nominal sector and impose to real sector (e.g. for investment demand), has been criticized by Islamic principles as well, especially when economy is deviated from its equilibrium position. This is due to a pillar principle in Islamic economics that believe cost of capital must be determined by capital rate of return in real sector and regardless interest determination in money market. This is the main theme of this study. To do that, we have had a pathological review on investment demand theories in orthodox economics focusing on Iran & global performances.
The results imply that in spite of using interest rate as criterion for cost of capital, some variables such as earning per Equity, P/E Ratio and etc., should be applied that can have better interpretation for rate of return in real sector. Meanwhile for institutionalizing real sector rate of return in Iran some structural reforms and changes are needed