Trim Size: 6in x 9in Alrifai bindex.tex V1 - 02/06/2015 3:21pm Page 223

Index

Page numbers followed by f or t refer to figures and tables, respectively.

A Arboun, 134–136 Abraham, 8 Arcapita, 152 Abu Dhabi, 151 Argentina, 25, 30 Abu Dhabi Islamic (ADIB), 107, Arizona, 93 150, 169 ARMs (adjustable-rate mortgages), 56, Abu Dhabi Islamic Bank UK, 111 63 Adjustable-rate mortgages (ARMs), 56, ASEAN (Association of Southeast Asian 63 Nations), 40 Aegean Sea, 9 Asia: Afghanistan, 161–164 and financial crisis of 2008, 75 Ahli United Bank, 111, 169 Islamic finance and banking in, AIG, 51, 62, 68, 189 108–110 Al-Ahli Commercial Bank, 111 Asian financial crisis (1997), 39–42 Al Baraka Banking Group, 108 Asset-based financing (asset-backed Al Baraka Turk, 108 financing), 187–188 Alcohol, 117–118 Asset monetization, 11 Algeria, 107, 162 Association of Southeast Asian Nations Alinma Bank, 105 (ASEAN), 40 Al-Qaeda, 162 Aston Martin, 167 Al-Rajhi Bank, 105, 109, 169 Asya Finans, 108 Aluminum, 122 Australia, 32, 200 Auto financing, 144 Amanah Islamic Bank, 110 Amana mutual funds, 166 Ameen Housing Co-operative (Palo B Alto, California), 113 Babylon, 8 American Home Mortgage Investment, Bagehot, Walter, 25, 46 55 COPYRIGHTEDBahrain, MATERIAL 1–2, 104, 105–106, 152, 153, Amundi, 109 155, 176 Anadolu Finans, 108 Bailout (Barofsky), 64–65 Animals, as form of money, 7–8 Bangladesh, 110 Ansar Co-operative Housing , first, 13 Corporation, 112 Bank Albilad, 105 Arab Bank, 164 Bank bailouts, 66, 67t, 80–82 Arab oil embargo, 101 Bank failures, 27, 34, 35, 35f, 66, Arab Spring, 85, 107 67t

223 Trim Size: 6in x 9in Alrifai bindex.tex V1 - 02/06/2015 3:21pm Page 224

224 INDEX

Bank for International Settlements BNP Paribas, 106 (BIS), 17, 81, 91, 97, 189, Boesky,Ivan,33 192–193 Bosnia, 162 Bank Islam Malaysia Berhad (BIMB), Boubyan Bank, 105 108 Brady, Nicholas, 31 Bank Negara, 108, 109 Brady Bonds, 31 Banknotes, 10, 13 Brady Plan, 31 , 169, 190, 191 Brazil, 25, 30, 31, 204 Bank of Canada, 201 Bretton Woods Agreement, 18–19, 28, Bank of Credit and Commerce 93, 182, 186 International (BCCI), 164 Bretton Woods System, 18–20 , 10, 13, 14–15, 29, BRICS nations, 204 69, 76, 78, 201 Brunei, 41, 104, 108, 110 Bank of Japan, 37, 78, 79, 88 Buffet, Warren, 189 Bank of London and the Middle East, Bundesbank, 201 111 Bush, George W., 52, 163 Bank of Sweden, 10 Bank of Tokyo-Mitsubishi UFJ, 151 C Bank of Whittier, 113 California, 93 , 89, 90 California Gold Rush, 199 Barofsky, Neil, 64–65 Call options, 135 Barter, 8 Canada, 27, 28, 32, 38, 112–113 Bay al-salam (forward sale), 131, 132, Capital Purchase Program, 66, 67t 132f Caribou Coffee Company, 114 BCCI (Bank of Credit and Commerce Carlyle Group, 1 International), 164 Cass Business School, 170 , 2, 55, 66, 67 Caste systems, 8 Belgium, 75, 199 Cattle, as form of money, 7 Benes, Jaromir, 202 Cave of the Patriarchs, 8 Benevolent loans, 100 CDOs, see Collateralized debt Berkshire Hathaway, 189 obligations Bernanke, Ben, 51, 199 CDSs, see Credit default swaps Bernstein, Jared, 204 Cecola, Randall, 33 Bible, 8 Central banks, 75–79, 76f, 83 Bill & Melinda Gates Foundation, 104 (Russia), 43, 44 Bills of exchange, 11 Central Intelligence Agency (CIA), 164 BIMB (Bank Islam Malaysia Berhad), Certificates of deposit, 141 108 Charitable giving, 99 Bimetallic standard, 14 Charles I, King, 12 BinLaden,Osama,162 Chechnya, 162 BIS, see Bank for International Checking accounts, 141 Settlements Chernomyrdin, Viktor, 43 Bismarck, Otto von, 15 Chicago Plan, 202–203 Black Monday (1987), 31–33, 32f Chile, 25 Blackstone Group, 92, 93 China, 9, 10, 41, 75, 79, 197, 200, 201, The Black Swan (Taleb), 188 204 Trim Size: 6in x 9in Alrifai bindex.tex V1 - 02/06/2015 3:21pm Page 225

Index 225

Church’s Chicken, 114 Credit cards, 143–144 CIA (Central Intelligence Agency), 164 Credit default swaps (CDSs), 61, 62, CIMB Bank, 139 62f, 69, 92 CIMB Islamic, 139 Credit ratings, 169t Cisco Systems, 48 Credit Suisse, 106, 110 , 30, 106, 163, 190, 191 Crude oil, 122 , 89, 90, 169 Cuba, 160 Citi Islamic Investment Bank, 106 Currency, 13–14 Clinton, Bill, 38, 53 Currency Wars (Rickards), 204 Clipping, coin, 9 Current accounts, 141 Code of Hammurabi, 8 Coinage, 8–9 Cold War, 160 D Collateralized debt obligations (CDOs), Dar al-Mal al-Islami (DMI), 110 59–62, 60f, 65, 69 Daric, 14 Colorado, 201 Davis, Polk & Wardwell, 33 Commercial Bank of Kuwait, 105 Debt: Commodities, 122 growth of, since 2008 financial crisis, Commodity value, 10 91f Conference of Finance Ministers of and instability of financial system, 82, Islamic Countries (Karachi, 1970), 83f, 90, 91, 97, 181–182, 182f, 102 186–189 Construction financing (istisna), 132, origins of, 8 133, 133f Debt: The First 5,000 Years (Graber), 8 Consumer banking, 140–147 Debt slaves, 100 consumer finance, 143–144 Defense industries, 118 deposits and savings accounts, Deferred-payment financing, 127 141–143 Deflation, 27 home finance, 144–147 Denarius, 14 Conventional finance and insurance, Deposits, 141–143 prohibition against, 118 Depository Institutions Deregulation Copper, 122 and Monetary Control Act, 34 Corporate finance, 147–154 Derivatives, 67–68, 91–93, 189–191 alternatives to lending in, 147–149 Derivatives market, size of, 81 sukuk in, 149–151 , 89, 90, 92, 106, 170 venture capital and private equity in, Devon Bank, 114 151–154 DIFC (Dubai International Financial Cost of funds, 141–142 Centre), 106 Cost-plus financing (murabaha), 127, Diminishing partnership structure, 145 127f, 128, 146–147, 172–175, Dimon, Jamie, 89 174f Dinar, 14 Counterparty , 68, 170 Discount rate, 53f Countrywide Financial Corporation, 64 DJIA, see Dow Jones Industrial Average Credit: Dodd–Frank Wall Street Reform and origins of, 8 Consumer Protection Act, 74, 75, secured vs. unsecured, 143 80, 190 Trim Size: 6in x 9in Alrifai bindex.tex V1 - 02/06/2015 3:21pm Page 226

226 INDEX

Dot-com bubble (2000), 20, 46–48, European Islamic Investment Bank, 47f, 188 111 Dow Jones Industrial Average (DJIA), European Market Infrastructure 2, 26, 26f, 27, 29, 85 Regulation (EMIR), 190 and Black Monday, 31, 32, 32f Eurozone debt crisis, 82, 90 and financial crisis of 2008, 52, 66 Exchange Stabilization Fund (ESF), 38, Draghi, Mario, 197 39 Dresdner Bank, 163 Drexel Burnham Lambert, 33 F Dubai, 69, 106, 107 Factoring, 148–149 Dubai International Financial Centre Faisal Finance, 108 (DIFC), 106 Faisal Finans Kurumu, 108 Dubai Islamic Bank, 102, 107, 140, Faisal Islamic Bank (Egypt), 102 150 Faisal Islamic Bank of Sudan, 102 , Dutch tulip mania, 23, 24f 25 Faisal Private Bank, 110 Fannie Mae, see Federal National Mortgage Association E Fed, see Bank Easy credit, 56, 88–89 Federal Deposit Insurance Corporation EEC (European Economic Community), (FDIC), 35, 51 20 Federal Home Loan Mortgage E.F. Hutton & Co., 33 Corporation (FHLMC, Freddie Egypt, 28, 85, 101, 102, 107 Mac), 51, 53, 54, 57–59, Egypt, ancient, 9 63–64 Emergency Economic Stabilization Act, Federal National Mortgage Association 51, 52, 74 (FNMA, Fannie Mae), 51, 53, EMIR (European Market Infrastructure 57–59, 63–64 Regulation), 190 Federal Reserve Act, 15 Emirates airline, 150 Federal Reserve Bank (Fed): Empires, 8–9 and Black Monday, 33 Energy commodities, 122 creation and purpose of, 13, 15–16 England, 10–13 and financial crises, 73 Enron, 61 and financial crisis of 2008, 52–54, Entertainment, 118 66, 66f, 76–78 Environmental concerns, 118 and gold, 17, 201 ESF (Exchange Stabilization Fund), 38, and oil crisis, 30 39 policy of, 76–79, Ethics, 119–121, 194–195 183, 184 Eurisbank, 112 Federal Reserve System, 15 Europe, Islamic finance and banking in, Federal Savings and Loan Insurance 110–112 Corporation (FSLIC), 34, 35 European Central Bank (ECB), 76, 78, FHMLC, see Federal Home Loan 87, 88, 197 Mortgage Corporation European Commission, 75 Fiat currency, 14, 20, 181, 182 European Economic Community (EEC), Finance One, 40 20 Financial centers, 15 Trim Size: 6in x 9in Alrifai bindex.tex V1 - 02/06/2015 3:21pm Page 227

Index 227

Financial crises, 7, 23–50, 24t. See also Forward sale (bay al-salam), 131, 132, Global financial crisis (2008); Next 132f financial crisis; Prevention of future Fractional reserve banking system, 13 crises France, 20, 112, 199 Asian financial crisis (1997), 39–42 Franklin Templeton, 109 Black Monday (1987), 31–33, 32f Fraud, 33, 34, 49, 62–65, 168 dot-com bubble (2000), 46–48, 47f , see Federal Home Loan Dutch tulip mania, 23, 24f, 25 Mortgage Corporation Japanese asset bubble collapse Freeman, Robert, 33 (1990s), 35–38, 36f –37f FSA (Financial Services Authority), Latin American debt crisis (1980s), 111 30–31 FSLIC (Federal Savings and Loan Mexican peso crisis (1994), 38, 39, Insurance Corporation), 34, 35 39f FT30 Index, 29 OPEC oil crisis (1973), 28–30, 28f, FTSE 100 Index, 32f 29f FX (foreign exchange) swaps, 192–193 Russian ruble crisis (1998), 42–46, 44f, 45f U.S. savings and loan crisis G (1989–1991), 33–35 G-10 (Group of 10), 20 Wall Street crash of 1929 and Great G-20 (Group of Twenty Finance Depression, 25–27, 26f Ministers and Central Bank Financial Crisis Enquiry Report, 65 Governors), 74 Financial Institutions Reform, Recovery Gambling, 117, 121 and Enforcement Act, 35 Games of chance, 117 Financial Services Authority (FSA), 111 Gatehouse Bank, 111 Financial systems, 7–9, 181–186 GCC, see Gulf Cooperation Council Financing: GE Capital, 150–151 construction, 132, 133, 133f Genesis, book of, 8 cost-plus, 127, 127f, 128 Georgia (U.S. state), 201 partnership, 129, 129f, 130 Germany, 15–18, 112, 155, 201 trust, 125–127, 126f Glass–Steagall Act, 27, 75, 152, 192 Financing leases, 130 Global financial crisis (2008), 1–3, Finland, 38 51–71, 73–85 Fiqh, 98, 100 aftermath of, 65–68 Fiqh al-ibadah, 100 and bailouts, 80–82 Fiqh al-mu’amalat, 100 buildup to, 52–55 First Islamic Investment Bank, 152 central banks’ response to, 75–79, Fisher, Irving, 202 76f –79f Flanders, 10 and Fannie Mae/Freddie Mac, Florida, 93 57–59, 63–64 FNMA, see Federal National Mortgage and fraud, 62–65 Association governments’ response to, 74, 74f, 75 Foreign exchange (FX) swaps, 192–193 international character of, 68–69, Forex scandal, 89–90 70f , 75 lenders’ role in, 56, 57, 57f, 63 Trim Size: 6in x 9in Alrifai bindex.tex V1 - 02/06/2015 3:21pm Page 228

228 INDEX

Global financial crisis (2008) Hoover, Herbert, 17, 27 (Continued) Hospitality, 118 unintended consequences of, 79–85 Household International, 68, 113 Wall Street’s role in, 59–62, 60f, Housing market, 3, 53–59, 184, 185, 64–65 185f Gold, 9–10, 12–13, 17–19, 122 Howard, J. Timothy, 64 Golden Age of Islam, 98 HSBC Bank, 63, 68, 89, 106, 109, 111, Gold manipulation scandal, 90 113–114, 141, 146, 147, 155, , 39, 65, 68, 106, 151, 191–192 169, 190, 191 HSBC Saudi Arabia, 105 Gold Reserve Act, 17 Hussein, Saddam, 38, 161 Goldsmiths, 12–13 , 75 Gold standard, 14–17, 198–201 Governments, and response to financial crisis of 2008, 74–75 I Government finance, 154–156 IBB, see Islamic Bank of Britain Graber, David, 8 IBRD (International Bank for Great Depression, 17, 25–27, 26f, 199, Reconstruction and Development), 200 19 , 187 Icahn, Carl, 33 Greece, 25, 69, 82, 90, 91 IDB, see Islamic Development Bank Greece, ancient, 9 Ihlas Finans, 108 Green, Stephen, 68 Ijara (leasing), 130, 130f, 131, 145, 148 Greenspan, Alan, 52, 199 Ijma, 98, 100 Group of 10 (G-10), 20 Ijtihad, 98, 100 Group of Twenty Finance Ministers and IMF, see International Monetary Fund Central Bank Governors (G-20), 74 Income inequality, 84, 84f, 85 Guaranteed return, lack of, 119, 120 India, 9, 204 Guidance Residential, 114, 146 Indiana, 201 Gulf Cooperation Council (GCC), 104, Indonesia, 40–42, 108, 110 108, 110, 112 IndyMac, 66 Gulf Finance House, 152, 167–168 Inflation, 9, 16, 25, 30, 188 Initial public offerings (IPOs), 46, 47 Inkombank, 44 H Insider trading, 33 Hadith, 98, 100 Interest, 99. See also Riba Halal, 118 definition of, 100 Hammurabi, 8 on savings accounts, 142 Hard commodities, 122 Interest-free loans, 100, 119 Hedge funds, 126–127 Interest rates, 30, 52, 53f, 78, 88 Heroin, 162 International Bank for Reconstruction Hoarding, 120 and Development (IBRD), 19 Home finance, 144–147 International Conference on Islamic Hong Kong, 32, 40, 109–110, 164 Economics (Makkah, 1976), 102 Hong Leong Bank, 139 International Economic Conference Hong Leong Islamic Bank, 139, 166 (London, 1977), 102 Trim Size: 6in x 9in Alrifai bindex.tex V1 - 02/06/2015 3:21pm Page 229

Index 229

International Monetary Fund (IMF), leasing (ijara) in, 130, 130f, 131 19–21, 31, 40–42, 202–205. market share of, 104f See also World Bank misconceptions about, see Intoxicants, 118 Misconceptions about Islamic Intrade, 121 finance Investment Dar, 167 modern history of, 101–102 Investors, equal treatment of, 120 in North America, 112–114 IPOs (initial public offerings), 46, 47 origins of, 98–99 IRA (Irish Republican Army), 160, partnership financingmusharaka ( )in, 161 129, 129f, 130 Iran, 102, 107, 160, 176 prohibited industries in, 117–118 Iran-Contra scandal, 164 sukuk in, 133–134 Iraq, 53, 102, 107, 161, 163 trust financingmudaraba ( )in, Ireland, 69, 82 125–127, 126f Irish Republican Army (IRA), 160, 161 Islamic Housing Co-Operative Iron ore, 122 (Toronto), 112 Islamic Banking Act (Malaysia), 108 Islamic International Arab Bank, 164 Islamic Banking Scheme (Malaysia), Israel, 28 109 Israeli Bank Stock crisis (2001), 25 Islamic Bank of Asia, 109 Istisna (construction financing), 132, Islamic Bank of Britain (IBB), 111, 166, 133, 133f 167 Italy, 10, 69, 82 Islamic Bank of Thailand, 110 Islamic banks, misconceptions about J riskiness of, 167–171, 169t Japan, 20, 28, 30, 90, 110, 197 Islamic bonds, 134, 149 Japanese asset bubble collapse (1990s), Islamic Development Bank (IDB), 102, 35–38, 36f –37f 104, 154–155 Johnson, James A., 64 Islamic extremism, 162 Jordan, 107, 164 Islamic finance and banking: JPMorgan Chase, 2, 51–52, 66, 67, 89, in Asia, 108–110 90, 106, 190, 191 construction financingistisna ( )in, JWM Partners, 45–46 132, 133, 133f consumer banking, 140–147 corporate finance, 147–154 K cost-plus financing (murabaha)in, Keating, Charles, 34 127, 127f, 128 Keynes, John Maynard, 16 criticisms and misconceptions of, KFH, see Kuwait Finance House 159–177 Kidder Peabody, 33 in Europe, 110–112 KKR, 153 forward sale (bay al-salam) in, 131, Kleiner Perkins Caufield & Byers 132, 132f (KPCB), 152 government finance, 154–156 Knight, Frank, 202 growth of, 103f Know-your-customer (KYC) policies, ın` Middle East, 103–108 163 key ethical rules in, 119–121 Kosher, 118 Trim Size: 6in x 9in Alrifai bindex.tex V1 - 02/06/2015 3:21pm Page 230

230 INDEX

KPCB (Kleiner Perkins Caufield & Louvre Accord, 20 Byers), 152 LTCM (Long-Term Capital Kumhof, Michael, 202 Management L.P.), 45–46 Kuveyt Turk Participation Bank, 108, Luxembourg, 75, 110, 112, 164 112 Lydia, 9 Kuwait, 25, 38, 102, 104, 107, 140, 161, 163 Kuwait Finance House (KFH), 102, M 105, 109, 114, 142, 153, 166, 169 Malaysia: Kuwait International Bank, 105 and Asian financial crisis, 40–42 Kuwait Real Estate Bank, 105 cost-plus financing in, 128 KYC (know-your-customer) policies, and dot-com bubble, 47 163 Islamic banking in, 101, 108–109, 139, 140 L non-Muslim customer base in, 166 Labor force, 185, 186, 186f sukuk in, 133–134 Lancaster University, 170 venture capital and private equity in, Laos, 40 152 Lariba American Finance House, 113, Malaysian Airlines, 150 114 Massachusetts, 65 LaRouche, Lyndon, 33 Maybank, 139 Latin American debt crisis (1980s), 25, MBSs (mortgage-backed securities), 58, 30–31 92 LBOs (leveraged buyouts), 153 Medicinal drugs, 118 Leasing (ijara), 130, 130f, 131, 145, Mediterranean civilization, 9 148 Meriwether,JohnW.,45 , 2, 51, 59, 68, 69 Merton, Robert C., 45 Leverage, 119–120 Mesopotamia, 8, 9 Leveraged buyouts (LBOs), 153 Metal-based coins, 9–10 Liberty Aerospace, 114 Mexican peso crisis (1994), 38, 39, LIBOR (London Interbank Offer Rate), 39f 89 Mexico, 25, 30 , 89, 191 Middle East, Islamic finance and Libya, 85, 107, 160 banking in, 103–108 Lloyds TSB, 111 Milken, Michael, 33, 34 Loans, interest-free, 100, 119 Minnesota, 201 London Interbank Offer Rate (LIBOR), Misconceptions about Islamic finance, 89 159–177 London Stock Exchange, 29 marketing gimmick, 171–175 London Whale, 190 not a stand-alone financial system, Long-Term Capital Management L.P. 175–176 (LTCM), 45–46 only for benefit of Muslims, 165–166 Losses: riskiness of Islamic banks, 167–171 limitation of, 119–120 terrorism, link to, 160–165 in partnership financing, 129 world domination, Shariah’s agenda in trust financing, 126 for, 166–167 Trim Size: 6in x 9in Alrifai bindex.tex V1 - 02/06/2015 3:21pm Page 231

Index 231

Mit-Ghamr, 101 National Bank of Sharjah, 107 Mohammad, Mahathir, 41 National Commercial Bank (NCB), 105 Monetary systems, 73 National Commission on Terrorist Money: Attacks Upon the United States, commodity value vs. specie value of, 163 10 NBK (National Bank of Kuwait), 105, and debt, 90 142 definition of, 122–123, 193 NCB (National Commercial Bank), 105 and instability of current financial Netherlands, 28, 75 system, 192–194 New Century Financial, 54 as non-commodity, 121 Newton, Isaac, 10 origins and development of, 7–12 Next financial crisis, 87–94 paper, 10, 123 and derivatives, 91–93 time value of, 123–124 and easy credit for subprime velocity of, 184, 184f borrowers, 88–89 Money laundering, 191–192 and excessive debt in system, 90, 91, Money supply, 193, 199, 200 91f, 97 Moody’s, 169 as opportunity for reform, 93 Morgan, J. Pierpont, 152 and rent-backed securities, 92, 92t, Morocco, 107 93 Mortgage-backed securities (MBSs), 58, and risk assumed by too-big-to-fail 92 banks, 89–90 Mozilo, Angelo, 64 social context of, 93 Mudaraba (trust financing), 125–127, Nixon, Richard, 20, 93, 186 126f Nomura Holdings, 151 Mudd, Daniel, 64 Noriba Bank, 106 Muhammad, Prophet, 98 North America, Islamic finance and Mujahideen, 161–162, 164 banking in, 112–114 Murabaha (cost-plus financing), 127, North American Free Trade Agreement , 127f 128, 146–147 (NAFTA), 38 Musharaka (partnership financing), North American Islamic Trust (NAIT), , 129, 129f 130, 145–146 113 Muslims, Islamic finance and, 165–166 North Korea, 160 Mutual funds, 126 Noruma, 109

N NAIT (North American Islamic Trust), O 113 Obama, Barack, 204 Naked CDSs, 61 , 85, 198 Napoleonic Wars, 14 Office of Comptroller of the Currency, NASDAQ Composite Index, 47, 47f, 48 190 NASDAQ-Dubai, 151 Office of Federal Housing Enterprise Nasser Social Bank, 101 Oversight, 64 National banks, 10 Office of Thrift Supervision, 35 National Bank of Kuwait (NBK), 105, OIC (Organisation of Islamic 142 Cooperation), 162, 167 Trim Size: 6in x 9in Alrifai bindex.tex V1 - 02/06/2015 3:21pm Page 232

232 INDEX

Oil crisis, 28–30, 101–102 Prepaid cards, 144 Oil prices, 42, 43, 43f Prevention of future crises, 181–196 Oman, 107–108 debt and, 186–189 Oneximbank, 44 derivatives and, 189–191 OPEC, see Organization of Petroleum ethics and, 194–195 Exporting Countries and instability of current system, OPEC oil crisis (1973), 28–30, 28f, 29f 181–186 Operating leases, 130 money and, 192–194 Operation Desert Storm, 161 too-big-to-fail banks and, 191–192 Operation Twist, 77 Price, transparency of, 121 Options, 135 Price specie flow mechanism, 199 Option premium, 135 Private equity, 129, 130, 148 Organisation of Islamic Cooperation Private equity (PE) industry, 1–2 (OIC), 162, 167 Profit, 99, 100 Organization of Petroleum Exporting of banks, 141 Countries (OPEC), 28, 30, 102 in construction financing, 132, 133 Oxen, as form of money, 8 in partnership financing, 129 and risk, 119 in trust financing, 125, 126 P as ultimate incentive, 195 PaineWebber, 33 Prohibited industries, 117–118 Pakistan, 101, 110, 162, 176 Promissory notes, 10–13, 134 Palestine Liberation Organization Protectionism, 15 (PLO), 160, 161 Public Mutual, 139 Palladium, 122 Put options, 135 Paper money, 10, 123 Participation banks, 108 Q Partnership financingmusharaka ( ), 129, Qatar, 102, 107 129f, 130, 145–146 Qatar International Islamic Bank, 167, Paulson, Henry, 51, 52 169 PE (private equity) industry, 1–2 QE, see Quantitative easing Persian Empire, 14 QE2, 76 Persian Gulf War, 38, 161 QE3, 77, 83 Philippines, 40, 42, 110 QIB UK, 111 Pictet & Cie, 110 Qiyas, 98, 100 PIIGS countries, 69, 82 Quantitative easing (QE), 76–79, 183, Pilgrim’s Management Fund, 101 184 Platinum, 122 Quran, 98, 100, 101, 117–118 Plaza Accord, 20 PLO (Palestine Liberation Organization), 160, 161 R Polo, Marco, 10 Raines, Franklin, 64 Pork, 118 RBS, see Pornography, 117 Reagan, Ronald, 30, 160–161 Portugal, 69, 82 Real estate finance, 144–148 Preferred shares, 120 Receivable financing, 148–149 Trim Size: 6in x 9in Alrifai bindex.tex V1 - 02/06/2015 3:21pm Page 233

Index 233

Recession, 3, 182, 184 Securitization, 11 Rent-backed securities, 92, 92t, 93 September 11, 2001 terrorist attacks, Resolution Trust Corporation (RTC), 52, 113, 162, 163 35 Sequoia Capital, 152 Return, lack of guaranteed, 119, 120 Shariah: Riba, 98–101, 117, 123 about, 98, 99 Rickard, James, 204 deposits in, 141 Risk, and profit, 119 ethical rules under, 119–121 RJR Nabisco, 153 industries prohibited under, 117–118 Roaring Twenties, 26 and “letter of the law” vs. “spirit of Robbins, Lionel, 25 the law,” 171–172 Rockefeller, Laurance S., 152 money as defined in, 122–123 Rodrıguez´ Valladares, Mayra, 190 myths about, 166–167 Rome, ancient, 7–8, 14, 23 and riba, 100, 101 Roosevelt, Franklin D., 202 scholarly review under, 125 Royal Bank of Scotland (RBS), 89, 111, Sharjah Islamic Bank (SIB), 107 169 Shearson Lehman, 33 Royal Mint, 10, 12 Sheep, as form of money, 8 RTC (Resolution Trust Corporation), Shekel, 8 35 Short-selling, 120 Rubin, Robert, 39 SIB (Sharjah Islamic Bank), 107 Russia, 160, 164, 200, 204 Siegel, Martin, 33 Russian ruble crisis (1998), 42–46, 44f, Silicon Valley, 47, 152 45f Silver, 9–10, 122 Simons, Henry, 202 Singapore, 40, 41, 108, 109, 111, 164 S Slavery, 8 SABB (Saudi British Bank), 105, 163 S&L crisis (1989–1991), 33–35 Sakk, 11 Smoot–Hawley Tariff Act, 17, 27 Salomon Brothers, 33 Social currencies, 8 Saturna Capital, 113, 166 Social justice, 99 Saudi Arabia, 102, 104, 105, 140, 155, Soddy, Frederick, 202 162, 176 Soft commodities, 122 Saudi British Bank (SABB), 105, 163 Song Dynasty, 10 Savings accounts, 141–143 Soros, George, 205 Savings and loan (S&L) crisis Souk Al-Manakh crash (1982), 25 (1989–1991), 33–35 South Africa, 200, 204 Saxony-Anhalt, 112, 155 South Korea, 40–42, 110 Scandinavia, 199 Southland Log Homes, 114 Scholes, Myron S., 45 Soviet Union (U.S.S.R.), 25, 160–161 Schulman, Gilbert, 33 Spain, 32, 69, 82, 91 SDRs (special drawing rights), 21, Special drawing rights (SDRs), 21, 203–206 203–206 Secured credit, 143 Specie value, 10 Securities and Exchange Commission Spencer, Leanne, 64 (SEC), 33, 64, 65 Sri Lanka, 110 Trim Size: 6in x 9in Alrifai bindex.tex V1 - 02/06/2015 3:21pm Page 234

234 INDEX

Stagflation, 29, 30 Thomas H. Lee Partners, 1 Bank, 89, 106, 109, Time deposits, 141 163, 191 Time value of money, 123–124 Stockholms Banco, 10 Tobacco, 118 Stock market: Tokobank, 44 investing in, 172 “Too big to bail,” 80 rise in, 183, 183f, 184 Too-big-to-fail banks, 66, 75, 80–82, Stock Market Crash (1929), 17, 25–27, 81f, 89–90, 191–192 26f “Too big to jail,” 89, 191–192 Subprime borrowers, easy credit and, Tourism Development and Investment 88–89 Company (Abu Dhabi), 151 Subprime mortgages, 56, 57, 57f Toyota, 151 Sudan, 107, 176 Transparency, 120–121 Suharto, 41 Treaty of Versailles, 16–18 Sukuk (sing. form sukk), 11, 109–110, Triffin, Robert, 19, 204 112, 133–134, 149–151, 150f, Triffin dilemma, 19, 204, 205 155 Truman, Ted, 205 Sumer, 8 Trust financing (mudaraba), 125–127, Sunnah, 98, 100, 101 126f Sunrise Equities Inc., 168 Tunisia, 85 Sweden, 10, 38 Turkey, 107, 108 Swiss Gold Initiative, 205 Switzerland, 110–111, 198, 200–201 U Syria, 28, 85, 107 UAE, see United Arab Emirates Systemic risk, 62 UBS, 89, 90, 106, 110 Umayyad Caliphate, 11 UM Financial, 112–113, 168 T Underwater mortgages, 120 Tabung Haji, 101, 108 Unemployment rate, 185 Taiwan, 41 United Arab Emirates (UAE), 102, 107, Takaful (Islamic insurance companies), 155, 176 109 United Bank of Kuwait (UBK), 111, Takaful SA (Luxembourg), 110 113–114 Taleb, Nassim, 188 : Taliban, 162, 163 and development of fiat standard, Tallies, 11–12 14–15 Tally stick, 11, 12 and financial crisis of 2008, 69, 75 Tang Dynasty, 10 Islamic banking industry in, Tapering, 78, 83 111–112, 164 Tariffs, 15, 17, 27 and oil crisis, 28, 29 Tawarruk, 134, 136 sukuk issued by, 155–156 Taxes, 9, 11–12 United Nations (UN), 18, 205 Term deposits, 143 United States. See also Federal Reserve Terrorism, 160–165 Bank (Fed) , 151 and debt ceiling, 187 Thailand, 40–42, 108, 110 in Great Depression, 27 Trim Size: 6in x 9in Alrifai bindex.tex V1 - 02/06/2015 3:21pm Page 235

Index 235

Islamic finance in, 113–114 Washington State, 201 protectionist policies of, 15, 17 Weapons, 118 University Bank, 114 Whitney, J. H., 152 University of Chicago, 202 Wilkis, Robert, 33 Unsecured credit, 143 World Bank, 31, 40 U.S. dollar, 14, 18, 28, 203–205 WorldCom, 61 U.S. Justice Department, 89, 168 World Trade Center bombing (1993), U.S.S.R. (Soviet Union), 25, 161 160–161 World War I, 16 Usury, 100 World War II, 18 World Wide Web, 46

V Velocity of money, 184, 184f Y Venture capital, 129, 130, 148 Yakima Products, 114 Vietnam, 41 Yeltsin, Boris, 43 Virginia, 201 Yemen, 107 Volcker, Paul, 30 Yom Kippur War, 28 Volcker Rule, 75 Yuan, 201

W Z Warburg, Eric M., 152 Zakat, 99 , 51–52, 66 Zombie banks, 34, 35, 37 Trim Size: 6in x 9in Alrifai bindex.tex V1 - 02/06/2015 3:21pm Page 236 Trim Size: 6in x 9in Alrifai bindex.tex V1 - 02/06/2015 3:21pm Page 237 Trim Size: 6in x 9in Alrifai bindex.tex V1 - 02/06/2015 3:21pm Page 238 Trim Size: 6in x 9in Alrifai bindex.tex V1 - 02/06/2015 3:21pm Page 239 Trim Size: 6in x 9in Alrifai bindex.tex V1 - 02/06/2015 3:21pm Page 240 Trim Size: 6in x 9in Alrifai bindex.tex V1 - 02/06/2015 3:21pm Page 241 Trim Size: 6in x 9in Alrifai bindex.tex V1 - 02/06/2015 3:21pm Page 242