Venture capital (VC) is a financial institution and a method of investment, which has become enormously popular in the United States particularly since the 1970s. One of the most remarkable characteristics of VC is the fact that it prefers to finance young entrepreneurs or start-ups that are usually rejected by the conventional institutions of finance.

Although "Arab Spring" is the name given to the latest events in the Middle East, I am of the opinion that the Arab world has just entered into a winter. Dictators are falling like leaves but it will take a while for the spring to blossom. Moreover, unlike in nature, the transition is not an automatic process. Spring will come only if certain pre-conditions are fulfilled.

This paper aims at analysing the relevance of the historical awqaf system for modern Islamic economies. The main argument focuses on the fact that the awqaf system has provided throughout Islamic history all the essential services at no cost to the state. Thus, a successful modernisation of the system implies a significant cut in government expenditure and all the associated benefits; including downsizing the state sector and a reduction and even an eventual elimination of riba. As far as the modernisation of the system is concerned, historical evidence indicates that the real exiting potential lies in the cash awqaf. It is envisaged here that two powerful Islamic financial institutions, the cash awqaf and mudarabah need to be combined. It is argued further that this combination should take place within the framework of Islamic banks and thus alter the portfolio of these banks in the desired direction, i.e. increasing the mudarabah/murabahah ratio.

Timur Kuran is an avid reader of Islamic economic and legal history and an immensely well informed scholar. This latest work not only combines his earlier arguments but also provides some new perspectives. The gist of Kuran's arguments is the following (p. 281) - 1. In its early centuries Islam developed a law of contracts that was sophisticated for the time; 2. This law allowed passive investors to shield their personal assets while … however, active partners carried full liability; 3. The death of a partner terminated the partnership automatically; 4. Due to the Islamic inheritance law and polygamy the numbers of heirs could be large; 5. The partnership termination rule, like the lack of entity shielding, discouraged the formation of large and long-lived partnerships. Successful businesses quickly disappeared and rarely survived the death of their founders; 6. The evolution from simple partnerships to the corporation never took place; 7. Thus several self-enforcing elements of Islamic law — contracts, inheritance system, marriage regulations — jointly contributed to the stagnation of the Middle East.

Muslims, for centuries, have fulfilled their social responsibilities and served their societies with an institution called waqf. Thus, waqfs have constituted the most important NGOs and civil society institutions in the Islamic world. Wealthy Muslims establish waqfs based upon a statement of Prophet Muhammad known as "sawab ba'd al wafat". The Prophet is reported to have said tge following: "When a person dies all his deeds come to an end and his account book, daftar al amal, is closed, except for three: Knowledge, from which people can benefit, ongoing charity, a pious offspring". Waqf is the institution which allows Muslims to fulfil all these three tasks, often simultaneously, and enables them to earn good deeds even after they pass away.

The tragic events in our post 9/11 world disguise the fact that Islam and the West have actually been in a symbiotic relationship over the very long period. Cross-cultural institutional borrowing has constituted a major component of this symbiosis. I intend to focus in this paper on the way these civilizations borrowed important economic institutions from each other. The paper will start with a brief theoretical model explaining the process of cross-cultural institutional borrowing. This will then be followed by an account of the economic institutions actually borrowed.

The statistics shows that of the richest top 20 countries in 2003, 19 were capitalist democracies. This article, thus, attempts to assess the potential association between economic development/ capitalism and democracy. In arguing for a positive nexus between the two, it also aims to locate the historical roots of this relationship. In doing so, the paper argues that Western capitalism historically evolved from market economy and capitalism developed under Islamic civilizations, which preceded the modern nature of Western capitalism by at least six hundreds years. It also argues that fundamental principles of modern democracy can be traced back to political structure of the initial Islamic community. Therefore, it asserts that Islam neither impedes nor objects to democracy and also contains many features of capitalism. In supporting these assertions, the paper introduces the concept of intergenerational Al-Ghazali Optimum and, therefore, argues that the most important values behind the political and economics success of the West can actually be found in a reinterpretation of maqasid al-Shari'ah.

Islamic finance is generally considered to be a new discioline which by implication also makes its impact on economic development a new phenomenon not yet fully understood. This way of thinking begs a huge unaswered question: if Islamic finance is, indeed, a relatively new discipline, how have Muslims managed their financial affairs from the time of the Prophet until the present?

Gharar is usually examined in the literature from the perspective of modern Islamic private finance. In this article, I will focus on public finance and try to explain how this important concept found and application in history. It is a concept that has a long history, and was embedded in Islamic jurist work over centuries of commnets and interpretations.

There are two basic approaches to Islamic economics and finance: Shari' ah compliant and Shari'ah based. The former is relatively easy and therefore dominates. It involves looking at the West for viable economic or financial institutions and instruments. After identifying these, it reverses engineering and dismantles them into their essential components. This is followed by the introduction of additional transactions, trying to make each component comply with the Shari'ah. It can then claim to have invented a new instrument that is Shari'ah compliant.

This book explores key issues within Islamic capitalism and finance, shedding light on whether the Islamic system can indeed be called 'capitalist', the principles on which the system was built, the institutions that were consequently developed, how they function and have evolved, and, perhaps, most importantly, whether they can be modernized to meet today's needs. Against the backdrop of rapid change in the Middle East, this book gives a solid background to the economic systems that will emerge in the world of Islam.

The relationship between Islam and capitalism has long fascinated social scientists. There is strong evidence that Islam had developed its own capitalism. Consider, for instance, that the bulk of the Shariah, Islamic jurisprudence, was written down by men most of whom were merchants. More importntly, even the Prophet Mohammad (S.A.w) himself was a merchant, who firmly believed in free markets and refused to interfere in prices. Moreover, of the four righteous Caliphs, Abu Bakr was a cloth merchant and Uthman was an importer of cereals.

In this article I will attempt to explain long term causes of decline of the Islamic world with specific reference to the Ottoman empire. The emphasis on the Ottoman empire is due to the enormous territories this empire controlled until the twentieth century as well as the survival of the rich Turkish archives. These archives contain some 400 million documents and are unique in the Islamic world. During the period 1453 to 1606, from the conquest of Constantinople to the treaty of Sitva-Torek (Zitvatorok), the Ottoman Empire emerged as a world power. As a world power it was capable of directly challenging Spain in the Western Mediterranean and supporting its enemies, the newly emerging Protestant nations of England, the Netherlands and Catholic France as well as projecting its power in the Indian Ocean all the way to Sumatra, to aid the Muslims of the region against the Portuguese.

In this article I will attempt to explain long term causes of decline of the Islamic world with specific reference to the Ottoman empire. The emphasis on the Ottoman empire is due to the enormous territories this empire controlled until the twentieth century as well as the survival of the rich Turkish archives. These archives contain some 400 million documents and are unique in the Islamic world. During the period 1453 to 1606, from the conquest of Constantinople to the treaty of Sitva-Torek (Zitvatorok), the Ottoman Empire emerged as a world power. As a world power it was capable of directly challenging Spain in the Western Mediterranean and supporting its enemies, the newly emerging Protestant nations of England, the Netherlands and Catholic France as well as projecting its power in the Indian Ocean all the way to Sumatra, to aid the Muslims of the region against the Portuguese.

Merchants in every civilization operate within specific institutional frameworks, which determine their relative efficiency and their transaction costs. It can be argued that a more advanced and efficient institutional framework leads to lower transaction costs and lower transaction costs, in turn, lead to higher competitiveness. Merchant privileged to operate within an institutional environment allowing lower transaction costs simply can compete better and drive their competitors, operating at higher transaction costs, out of international markets.

As it is well known, interest prohibition constitutes one of the most important traits of Islamic economy and finance. The immediate consequence of the prohibition is the problem of combining the factors of production. Put differently, if Q=f (K, L, N, E, ....) is a simple production function, where Q is production, K is capital, L is labour, N is natural resources and E is entrepreneurship.

How does an Islamic state (or, for that matter, a corporation), borrow a substantial amount of capital from mostly Muslim savers or high net-worth individuals, and fast? In 1774, this was the question which the Ottoman Minister of Finance had to answer urgently. Defeated by the armies of Imperial Russia, Ottomans had to pay a huge war indemnity within a year. Moreover, since the borrowing had to be done by the government of the Caliph, it had to be Shari'a based.

The economic role of the state in Islam is a hot topic that has interested many Islamic economists. Their general approach has been to examine the verses of the Qur'an as well as the ahadith and the sunnah of the Prophet and then deduce from these how an ideal Islamic economy should function today. This approach can be summarized as 'what the economic role of the state in Islam should be'.

Recently, there have been an increasing number of publications and conferences on the re-introduction of the Islamic gold dÊnÉr, a coin with pure gold content. The phenomenon could even be construed as a campaign. The proponents of this idea, who are known as denarists and are particularly active in Malaysia, advocate that this country, as well as the whole Islamic world, “urgently” return to the Islamic gold dÊnÉr. Their call has gained considerable urgency in view of the latest crisis in the West. But what the denarists are doing is proposing an essentially historical system (coinage was the norm throughout history) without having studied how the system they are proposing actually functioned in history. The main purpose of this article is to fill this vacuum.

The Tabung Haji is one of the most successful institutions for financing and organizing the modern pilgrimage. This was confirmed in 1990, when it was awarded the Islamic Development Bank prize in Islamic banking for the services it has provided to Malaysian pilgrims. In this chapter we will explain not only its establishment but also the reasons behind its success. This information will be provided in the hope that other Islamic countries may also wish to establish similar institutions.