This document summarizes research comparing United States finance and Islamic finance. It is broken into three main topics: the financial history of each system, their banking and reporting systems, and how they invest in financial markets. The US system is compared to Islamic finance which is governed by Sharia law from the Quran and Hadith. The research found that during the 2008 financial crisis, Islamic finance was able to shield itself from the effects, while the US took longer to recover, showing the potential resilience of Islamic finance. Future research ideas are proposed to further analyze the relationship between Islamic countries' GDP and the EU's GDP, as well as examining risks of speculation bubbles within Islamic finance.

1. Islamic Finance versus United States Finance
Tyler Ortega
Jindal Naveen School of Management, University of Texas at Dallas
Advisor: Professor Shawn Carraher
RESULTS
METHOD
INTRODUCTION
GRAPH OF ISLAMIC STOCK INDEX COMPARISON
CONCLUSIONS
RECOMMENDATIONS
ACKNOWLEDGEMENTS
The rise of financial markets, starting in the twentieth
century has become a prominent trend in international
business, from western countries, like the United States,
and to the Far East, like the Islamic community. In 2008 the
United States faced a financial crisis that was compared to
the Great Depression in the 1930’s, there was a Eurozone
Crisis occurring throughout most of Europe, and the
Islamic financial/banking community during the same time
of these events were able to be relatively resilient to these
effects. These countries have made significant, global
economic impacts both positively and negatively. Although
the size of the Islamic economy does not surpass that of the
United States, it is one of the largest conglomerated
economies around the globe and in addition, the Islamic
community makes up twenty-five percent of the world
population.
The research is broken down into three main topics that
compare and contrast United States and Islamic finance.
The first part of the paper is a discussion of the two group’s
financial background history. I observe U.S. history from
colonial America, from World War I to the 1950’s, and
from the 1970’s to the present. With Islamic finance
history, I observed the time frames of the medieval times to
the 1940’s and to the present. The second part is the system
of banking and financial reporting. I compare and contrast
the different institutions that governed the two group’s
finance, for example, for the U.S. there is the GAAP, the
SEC and FASB. For Islamic finance, are mostly based on
the “Sharia” from the Quran and the Hadith. The third part
is how they invest with their financial markets, including
what they are allowed to invest in or what business
transactions they can be part of. Again, these are based
upon regulations/religious beliefs of the two.
For future research, it would be a good potential research
idea to further elaborate the correlation of the Islamic
countries’ GDP with that of the European Union’s GDP
(EU). What are the obstacles that Islamic finance face
when they do not follow the IFRS, what are some
positive externalities that come from not being part of
IFRS? Lastly, is it possible for realm of Islamic finance
to inadvertently get involved with a speculation bubble?
These recommendations would help global managers and
international professionals to be more cognitive of the
kind of correlations and effects it has tied to globe.
In recent years, the United States finance has been trying
to recover from the Financial Crisis of 2008, in contrast,
the Islamic finance community has been able to shield
itself from the effects of the crisis, giving Islamic finance
a significant advantage over countries like the United
States and other conventional banks around the world.
Islamic finance, although does not have the largest
economy than the U.S., it does have the potential to
outperform the United States in the future due to its
different way of banking that has made it resilient to
global economy disasters. Lastly, there is evidence of a
growing Islamic stock market that is competing at the
same level as American and conventional stock indices, if
not performing better than them. The Islamic finance
world shows the potential to be better off than its
American and conventional counterparts.
There has been evidence that Islamic banks in the past, or at least
during global financial crisis, have higher intermediation ratios,
higher asset quality, and higher capitalization, and Islamic banks are
also, overall, more efficient than American banks
Intermediation
Rates
Asset Quality Capitalization Efficiency
I am thankful to my Professor Shawn Carraher, the IJAS
organization, and the many authors of other journal
articles that helped with my research.