Clearing up misconceptions about Islamic finance

Nizar Al Shubaily, an experienced Islamic banker, co-authors with me on Islamic finance. Although I believed that I was well versed in matters related to Islamic finance, the prevalence of misunderstood terms and concepts in the media and elsewhere have often confused matters. Mr Al Shubaily has helped me understand a few things. To start off, let’s take a step

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Zombie companies can be harmful

The term “zombie company” has recently entered people’s lexicon as the phenomenon manifests itself in China. Yet this issue did not start with China, it is closely linked to the problems faced by Japan that started in the early 90’s, called Japan’s Lost Decade and sometimes the lost two decades, which arrested the development of their economy for at least

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SWFs as endowments

Different sovereign wealth funds (SWFs) have different mandates. The largest are presumed to have a mandate similar to that of an endowment. The idea is that the state owns a large but fixed amount of a valuable commodity, usually oil, and that this oil is the property of not just the living citizens but also of all future citizens. Therefore,

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UNB kicks off earnings season

Abu Dhabi lender Union National Bank announced its second-quarter financials. On the face of it things look positive with an increase in net profit of 7.2 per cent relative to the same period last year and that net income from interest and Islamic financing, the core business of a bank, rose 2.6 per cent. However, a quick peek at the underlying fundamentals shows

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Unmasking business shenanigans

I have recently pointed out that one of the warning signs that a business is facing issues is when core revenue, ie revenue from the main business lines, is down but profit is up. Why the combination? Why not simply flag a drop in core revenue? Because it is normal for revenue to fluctuate – especially in a challenging economy.

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