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Banking system in Islamic countries: Saudi Arabia and Egypt

by Albalawi, Suliman Hamdan, J.S.D., Stanford University, 2006, 244 pages; AAT 3235172
Abstract (Summary)

Islamic banking is one of the emerging fields in the global financial market, growing at a very fast pace
all around the world.

This study is primarily concerned with the theory of Islamic banking and its practice in Saudi Arabia
and Egypt. The research seeks to analyze the theoretical foundations of Islamic banking and practice in
the two countries, examine an shed light on similarities and differences between the structure and
practice of Islamic banking and western banking, and identify the problems and challenges facing
Islamic banks in Saudi Arabia and Egypt.

Unlike conventional banks, the operations of Islamic banks are not interest based. They are primarily
governed by Sharia laws which prohibit interest transactions, considered by a majority of Islamic
scholars as Riba (usury). Islamic banks have turned to the creation of equity through profit-loss-sharing
(PLS) financial transactions, as well as current accounts. However, the study concludes that Islamic
banks have departed from using profit-loss-sharing techniques as a core principle of Islamic banking,
and rely primarily on non-PLS financial instruments.

The Islamic finance and banking movement has now become main-stream, with participation and
competition from leading, multinational conventional banks. This paper examines the merit and
relevance of traditional arguments, especially in the claims and conduct of the Islamic financial
institutions. It also looks into capital structure of Islamic banks or firms. The study then concludes by
looking into issues pertaining to enforceability of court decisions, arbitration awards and
implementation of foreign judgments in financial transactions.
Indexing (document details)Advisor: Scott, Kennth E.
School: Stanford University
School Location: United States -- California
Keyword(s): Banking, Islamic, Saudi Arabia, Egypt, Capital structure
Source: DAI-A 67/09, Mar 2007
Source type: Dissertation
Subjects: Law, Banking
Publication Number: AAT 3235172
ISBN: 9780542892004
Document URL: http://proquest .umi.com/pqdweb?did=1232404901&sid=1&Fmt=2&clientId=69955
&RQT=309&VName=PQD
ProQuest document ID: 1232404901

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From petrodollars to Islamic dollars: The strategic construction of Islamic banking in the Arab Gulf
by Smith, Kristin, Ph.D., Harvard University, 2006, 213 pages; AAT 3245198
Abstract (Summary)

This dissertation develops an analytic framework to explain the emergence of Islamic banking: a "least
likely case" of cultural persistence in the technocratic field of finance where the compulsion to
standardize practices is most intense. I maintain that the origins and repercussions of Islamic finance
cannot be fully understood without recognizing its character as a constructivist project. I then develop
this argument by analyzing Islamic banks---their origins; their development in the Gulf States; their
negotiation with global finance; and their relationship to political Islamism---through the conceptual
lens of strategic constructivism.

Strategic constructivism is the act of making an institution work towards alternative political goals
through symbolic action. In situations of hierarchy, creative syncretism enables agents to change the
symbolic content of imposed institutions, signaling different political goals and mobilizing society to
achieve them. At its most successful, strategic constructivism has the potential to remake politics by
shifting the balance of power between groups. Conceptually, it provides a framework for integrating
symbolic power into the study of institutions in order to generate a political theory of institutional
change.

In the Arab Gulf, the strategic construction of Islamic banks enabled Islamist activists to place capital in
the service of Islamic identity, transforming the oil windfall into a politically salient project. My
research in Kuwait reveals how Islamic finance works on the symbolic level, empowering new agendas
through earmarking, and facilitating Islamist collective action between likeminded organizations and
politicians. The interplay of culture and capital is mutually reinforcing, suggesting that the liberalization
of Gulf economies may actually hasten the Islamization of Gulf societies.

However, this enterprise is dependent on the acceptance of Islamic finance by state and international
regulatory authorities. My research reveals a paradoxical finding: international financial institutions
have helped midwife the institutionalization of Islamic financial markets. Indeed, the Islamic banks have
used their endorsement to challenge the opposition of their own state authorities to the integration of
religious language into financial standards. Equally surprising is the decisive role played by September
11 th in overcoming these objections, paving the way for the future growth of the industry.
Indexing (document details)Advisor: Dominguez, Jorge
School: Harvard University
School Location: United States -- Massachusetts
Keyword(s): Petrodollars, Islamic, Dollars, Banking, Arab Gulf, Political economy
Source: DAI-A 67/12, Jun 2007
Source type: Dissertation
Subjects: Finance, Political science, Social structure
Publication Number: AAT 3245198
Document URL: http://proquest .umi.com/pqdweb?did=1257794701&sid=1&Fmt=2&clientId=69955
&RQT=309&VName=PQD
ProQuest document ID: 1257794701

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