The death of Osama bin Laden - the end of Al-Qaeda's Pan-Islamic ambition?

This paper evaluates the implications of Osama bin Ladin’s death for the future of al-Qaeda’s global jihad. It critically examines the debate as to the make-up of the group and identifies bin Ladin’s primary role as chief ideologue advocating a defensive jihad to liberate the umma. The rationale and appeal of bin Ladin’s message and Muslims’ reaction to both his statements and al-Qaeda’s increasing use of sectarian violence are assessed in the context of Pan-Islam as political ideology. The paper concludes that while the ideal of Islamic unity and the sentiment of Muslim solidarity are unlikely to vanish, al-Qaeda’s violent jihad has not only failed to achieve these goals but has worked against it, thereby confining it to the political margins.

Leader of the pack? German monetary dominance in Europe prior to EMU

In this paper, the monetary policy independence of European nations in the years before European Economic and Monetary Union (EMU) is investigated using cointegration techniques. Daily data is used to assess pairwise relationships between individual EMU nations and ‘lead’ nation Germany, to assess the hypothesis that Germany was the dominant European nation prior to EMU. By and large our econometric investigations support this hypothesis, and lead us to conclude that the only European nation to lose monetary policy independence in the light of monetary union was Germany. Our results have important policy implications. Given that the loss of monetary policy independence is generally viewed as the main cost of monetary unification, our findings suggest a reconsideration of the costs and benefits of monetary integration. A country can only lose what it has, and in Europe the countries that joined EMU — spare Germany — apparently did not have much to lose, at least not in terms of monetary independence. Instead, they actually gained monetary policy influence by getting a seat in the ECB's governing council which is responsible for setting interest policy in the euro area.

Islamic mutual funds' financial performance and international investment style: evidence from 20 countries

We pursue the first large-scale investigation of a strongly growing mutual fund type: Islamic funds. Based on an unexplored, survivorship bias-adjusted data set, we analyse the financial performance and investment style of 265 Islamic equity funds from 20 countries. As Islamic funds often have diverse investment regions, we develop a (conditional) three-level Carhart model to simultaneously control for exposure to different national, regional and global equity markets and investment styles. Consistent with recent evidence for conventional funds, we find Islamic funds to display superior learning in more developed Islamic financial markets. While Islamic funds from these markets are competitive to international equity benchmarks, funds from especially Western nations with less Islamic assets tend to significantly underperform. Islamic funds’ investment style is somewhat tilted towards growth stocks. Funds from predominantly Muslim economies also show a clear small cap preference. These results are consistent over time and robust to time varying market exposures and capital market restrictions.