Haroun Rahimi has obtained his B.A. in Law from Herat University, his LLM in Global Business Law from the University of Washington School of Law, and his Ph.D. from the University of Washington. Rahimi is Assistant Professor of Law at the American University of Afghanistan. Rahimi's research focuses on economic laws, institutional reform, Islamic finance, and divergent conceptions of rule of law in the Muslim and modern thoughts. Rahimi's research has appeared in reputable local and international journals. Rahimi has also collaborated as an independent consultant with a number of research firms and policy think tanks conducting policy research on institutional development and good governance in the South Asia context. At the Oxford Centre for Islamic Studies, Rahimi has worked on Islamic finance as a poverty alleviation strategy, legal history of Afghanistan and the ways that legal transplantation is legitimized in Muslim countries. More recently, Rahimi was a visiting scholar at the International Institute for the Unification of Private Law (UNIDROIT) in Rome. Currently, Rahimi is a Visiting Professor at the Bocconi University School of Law in Milan, Italy.

• Acknowledgement PrefaceIntroductionBroader theoretical landscape and the case of AfghanistanOverview of the book’s organization and summary of its argumentMethodology and DefinitionsGrounded TheorySampling and Data CollectionDefinitions1. Background on the Economy and the Problems of Credit Transacting in AfghanistanA General Picture of Afghanistan’s Economy under the Islamic RepublicMain Types of Actors in Afghanistan’s Credit EconomyAn Analysis of Businesses in AfghanistanBusiness Registry Data on Business Registry and Initial Capital Investment in Five Major ProvincesThe Business Survey Data on Business Establishments in AfghanistanAn Overview of the Social Context of Afghanistan’s EconomyA Brief Overview of Institutional Context of Afghanistan’s EconomyFundamental Problems of Credit Transactions in AfghanistanAfghanistan Has a Volatile Business ClimateFormal Property Rights in AfghanistanFormal Commercial Dispute Resolution in Afghanistan2. Informal Financial and Dispute Resolution Institutions in AfghanistanSupply Chains and Trade CreditMarket Competition and Provision of Trade CreditWeekly Payment System (Ugraee)How Businesses Come to Trust Credit Sales in AfghanistanTrade Credit versus Bank LoansSources of Initial Capital to Start a BusinessPrevailing Institutions in Afghanistan Disincentivize Destructive Innovation and Creative DestructionAgency Costs Limit Business ExpansionFamily Businesses in AfghanistanTrade Credit from Suppliers Located Outside AfghanistanIs the Solution Curbing Credit Sales?Sarrafs and Sarrafi MarketsDeposit-keepingDomestic Money Transfer (Hawala)International Money Transfer (Hawala)Currency ExchangeSpeculative Trade in Currencies (Sita) and Public Auctions (Booli)Sarraf’s ChecksShort-Term Working Capital LoansMedium and Long-Term Sarrafi LoansEquity FinancingThe Case of Balkh’s Sarrafi MarketReligious Prohibition of Interest and Access to FinanceRegional Variations within Sarrafi MarketsGeraweeSize of Gerawee MarketGerawee and its variationsImportant Characteristics of the Gerawee MarketBay’ al-Wafa: Sale with a Right of RepurchaseGerawee in Fatwas issued by the Afghan MuftisStatus of Gerawee under Afghan Civil Code of 1977Gerawee cases before Afghan CourtsSar qufliWhat is Sar qufli?Recognition of Sar qufli by Commercial CourtsThe Contrast between Judicial Treatment of Sar qufli and GeraweeInformal Dispute Resolution Institutions in Afghanistan: Who Uses Them and Why?Afghan Merchants Prefer Informal Dispute Resolution InstitutionsWho Uses Formal and Informal Dispute Resolution Institutions in AfghanistanWhy Merchants Use Informal Dispute ResolutionVariation in the Effectiveness of Informal Dispute Resolution InstitutionsInformal Dispute Resolution and Pashtun CultureThe Use of Force to Resolve a Commercial Dispute3. Afghanistan’s Formal Financial InstitutionsFormal Financial Intermediaries in Afghanistan: Are Sarrafs Included?Formal Regulations of SarrafsWhat Is Wrong with the Sarrafi Regulation?Banks in AfghanistanTrust in BanksBanks’ Total AssetsBanks’ Total DepositsBanks’ LoansGovernment Strategic Policies Aimed to Improve Access to Credit during the Islamic RepublicAfghanistan National Peace and Development Framework (2017-2021)Ministry of Economics’ Afghan Government Economic Plan (National Economic Plan) (2013)Ministry of Commerce and Industries Strategic Plan (Commerce Strategy) (2016-2020)Afghanistan Central Bank Strategic Plan (Banking Strategy) (2017-2021)Ministry of Justice Strategic Plan (Justice Strategic Plan) (2014-2018)Analysis of Afghan Government Strategic Policies4. A Critique of the Approach to Institutional Reform in Afghanistan, and a Proposal for a New Approach: Grounded Institutional ReformGrounded Institutional Reform: A Revised Approach for the Countries with Poor Infrastructure, Limited Market Expansion Opportunities, and a Willing GovernmentRationales for Anti-Informal Institutions Positions: The Problems of Formalizing Informal Institutions in AfghanistanTheoretical Underpinning of Anti-Informal Institutions in AfghanistanPractical Problems of Absorbing Informal Institutions in AfghanistanWhat Would Reforms Based on Grounded Institutional Reform Look Like in Afghanistan?Conclusions and RecommendationsBibliographyAppendix IAppendix II

Haroun Rahimi has obtained his B.A. in Law from Herat University, his LLM in Global Business Law from the University of Washington School of Law, and his Ph.D. from the University of Washington. Rahimi is Assistant Professor of Law at the American University of Afghanistan. Rahimi's research focuses on economic laws, institutional reform, Islamic finance, and divergent conceptions of rule of law in the Muslim and modern thoughts. Rahimi's research has appeared in reputable local and international journals. Rahimi has also collaborated as an independent consultant with a number of research firms and policy think tanks conducting policy research on institutional development and good governance in the South Asia context. At the Oxford Centre for Islamic Studies, Rahimi has worked on Islamic finance as a poverty alleviation strategy, legal history of Afghanistan and the ways that legal transplantation is legitimized in Muslim countries. More recently, Rahimi was a visiting scholar at the International Institute for the Unification of Private Law (UNIDROIT) in Rome. Currently, Rahimi is a Visiting Professor at the Bocconi University School of Law in Milan, Italy.

• Acknowledgement PrefaceIntroductionBroader theoretical landscape and the case of AfghanistanOverview of the book’s organization and summary of its argumentMethodology and DefinitionsGrounded TheorySampling and Data CollectionDefinitions1. Background on the Economy and the Problems of Credit Transacting in AfghanistanA General Picture of Afghanistan’s Economy under the Islamic RepublicMain Types of Actors in Afghanistan’s Credit EconomyAn Analysis of Businesses in AfghanistanBusiness Registry Data on Business Registry and Initial Capital Investment in Five Major ProvincesThe Business Survey Data on Business Establishments in AfghanistanAn Overview of the Social Context of Afghanistan’s EconomyA Brief Overview of Institutional Context of Afghanistan’s EconomyFundamental Problems of Credit Transactions in AfghanistanAfghanistan Has a Volatile Business ClimateFormal Property Rights in AfghanistanFormal Commercial Dispute Resolution in Afghanistan2. Informal Financial and Dispute Resolution Institutions in AfghanistanSupply Chains and Trade CreditMarket Competition and Provision of Trade CreditWeekly Payment System (Ugraee)How Businesses Come to Trust Credit Sales in AfghanistanTrade Credit versus Bank LoansSources of Initial Capital to Start a BusinessPrevailing Institutions in Afghanistan Disincentivize Destructive Innovation and Creative DestructionAgency Costs Limit Business ExpansionFamily Businesses in AfghanistanTrade Credit from Suppliers Located Outside AfghanistanIs the Solution Curbing Credit Sales?Sarrafs and Sarrafi MarketsDeposit-keepingDomestic Money Transfer (Hawala)International Money Transfer (Hawala)Currency ExchangeSpeculative Trade in Currencies (Sita) and Public Auctions (Booli)Sarraf’s ChecksShort-Term Working Capital LoansMedium and Long-Term Sarrafi LoansEquity FinancingThe Case of Balkh’s Sarrafi MarketReligious Prohibition of Interest and Access to FinanceRegional Variations within Sarrafi MarketsGeraweeSize of Gerawee MarketGerawee and its variationsImportant Characteristics of the Gerawee MarketBay’ al-Wafa: Sale with a Right of RepurchaseGerawee in Fatwas issued by the Afghan MuftisStatus of Gerawee under Afghan Civil Code of 1977Gerawee cases before Afghan CourtsSar qufliWhat is Sar qufli?Recognition of Sar qufli by Commercial CourtsThe Contrast between Judicial Treatment of Sar qufli and GeraweeInformal Dispute Resolution Institutions in Afghanistan: Who Uses Them and Why?Afghan Merchants Prefer Informal Dispute Resolution InstitutionsWho Uses Formal and Informal Dispute Resolution Institutions in AfghanistanWhy Merchants Use Informal Dispute ResolutionVariation in the Effectiveness of Informal Dispute Resolution InstitutionsInformal Dispute Resolution and Pashtun CultureThe Use of Force to Resolve a Commercial Dispute3. Afghanistan’s Formal Financial InstitutionsFormal Financial Intermediaries in Afghanistan: Are Sarrafs Included?Formal Regulations of SarrafsWhat Is Wrong with the Sarrafi Regulation?Banks in AfghanistanTrust in BanksBanks’ Total AssetsBanks’ Total DepositsBanks’ LoansGovernment Strategic Policies Aimed to Improve Access to Credit during the Islamic RepublicAfghanistan National Peace and Development Framework (2017-2021)Ministry of Economics’ Afghan Government Economic Plan (National Economic Plan) (2013)Ministry of Commerce and Industries Strategic Plan (Commerce Strategy) (2016-2020)Afghanistan Central Bank Strategic Plan (Banking Strategy) (2017-2021)Ministry of Justice Strategic Plan (Justice Strategic Plan) (2014-2018)Analysis of Afghan Government Strategic Policies4. A Critique of the Approach to Institutional Reform in Afghanistan, and a Proposal for a New Approach: Grounded Institutional ReformGrounded Institutional Reform: A Revised Approach for the Countries with Poor Infrastructure, Limited Market Expansion Opportunities, and a Willing GovernmentRationales for Anti-Informal Institutions Positions: The Problems of Formalizing Informal Institutions in AfghanistanTheoretical Underpinning of Anti-Informal Institutions in AfghanistanPractical Problems of Absorbing Informal Institutions in AfghanistanWhat Would Reforms Based on Grounded Institutional Reform Look Like in Afghanistan?Conclusions and RecommendationsBibliographyAppendix IAppendix II

Haroun Rahimi has obtained his B.A. in Law from Herat University, his LLM in Global Business Law from the University of Washington School of Law, and his Ph.D. from the University of Washington. Rahimi is Assistant Professor of Law at the American University of Afghanistan. Rahimi's research focuses on economic laws, institutional reform, Islamic finance, and divergent conceptions of rule of law in the Muslim and modern thoughts. Rahimi's research has appeared in reputable local and international journals. Rahimi has also collaborated as an independent consultant with a number of research firms and policy think tanks conducting policy research on institutional development and good governance in the South Asia context. At the Oxford Centre for Islamic Studies, Rahimi has worked on Islamic finance as a poverty alleviation strategy, legal history of Afghanistan and the ways that legal transplantation is legitimized in Muslim countries. More recently, Rahimi was a visiting scholar at the International Institute for the Unification of Private Law (UNIDROIT) in Rome. Currently, Rahimi is a Visiting Professor at the Bocconi University School of Law in Milan, Italy.

• Acknowledgement PrefaceIntroductionBroader theoretical landscape and the case of AfghanistanOverview of the book’s organization and summary of its argumentMethodology and DefinitionsGrounded TheorySampling and Data CollectionDefinitions1. Background on the Economy and the Problems of Credit Transacting in AfghanistanA General Picture of Afghanistan’s Economy under the Islamic RepublicMain Types of Actors in Afghanistan’s Credit EconomyAn Analysis of Businesses in AfghanistanBusiness Registry Data on Business Registry and Initial Capital Investment in Five Major ProvincesThe Business Survey Data on Business Establishments in AfghanistanAn Overview of the Social Context of Afghanistan’s EconomyA Brief Overview of Institutional Context of Afghanistan’s EconomyFundamental Problems of Credit Transactions in AfghanistanAfghanistan Has a Volatile Business ClimateFormal Property Rights in AfghanistanFormal Commercial Dispute Resolution in Afghanistan2. Informal Financial and Dispute Resolution Institutions in AfghanistanSupply Chains and Trade CreditMarket Competition and Provision of Trade CreditWeekly Payment System (Ugraee)How Businesses Come to Trust Credit Sales in AfghanistanTrade Credit versus Bank LoansSources of Initial Capital to Start a BusinessPrevailing Institutions in Afghanistan Disincentivize Destructive Innovation and Creative DestructionAgency Costs Limit Business ExpansionFamily Businesses in AfghanistanTrade Credit from Suppliers Located Outside AfghanistanIs the Solution Curbing Credit Sales?Sarrafs and Sarrafi MarketsDeposit-keepingDomestic Money Transfer (Hawala)International Money Transfer (Hawala)Currency ExchangeSpeculative Trade in Currencies (Sita) and Public Auctions (Booli)Sarraf’s ChecksShort-Term Working Capital LoansMedium and Long-Term Sarrafi LoansEquity FinancingThe Case of Balkh’s Sarrafi MarketReligious Prohibition of Interest and Access to FinanceRegional Variations within Sarrafi MarketsGeraweeSize of Gerawee MarketGerawee and its variationsImportant Characteristics of the Gerawee MarketBay’ al-Wafa: Sale with a Right of RepurchaseGerawee in Fatwas issued by the Afghan MuftisStatus of Gerawee under Afghan Civil Code of 1977Gerawee cases before Afghan CourtsSar qufliWhat is Sar qufli?Recognition of Sar qufli by Commercial CourtsThe Contrast between Judicial Treatment of Sar qufli and GeraweeInformal Dispute Resolution Institutions in Afghanistan: Who Uses Them and Why?Afghan Merchants Prefer Informal Dispute Resolution InstitutionsWho Uses Formal and Informal Dispute Resolution Institutions in AfghanistanWhy Merchants Use Informal Dispute ResolutionVariation in the Effectiveness of Informal Dispute Resolution InstitutionsInformal Dispute Resolution and Pashtun CultureThe Use of Force to Resolve a Commercial Dispute3. Afghanistan’s Formal Financial InstitutionsFormal Financial Intermediaries in Afghanistan: Are Sarrafs Included?Formal Regulations of SarrafsWhat Is Wrong with the Sarrafi Regulation?Banks in AfghanistanTrust in BanksBanks’ Total AssetsBanks’ Total DepositsBanks’ LoansGovernment Strategic Policies Aimed to Improve Access to Credit during the Islamic RepublicAfghanistan National Peace and Development Framework (2017-2021)Ministry of Economics’ Afghan Government Economic Plan (National Economic Plan) (2013)Ministry of Commerce and Industries Strategic Plan (Commerce Strategy) (2016-2020)Afghanistan Central Bank Strategic Plan (Banking Strategy) (2017-2021)Ministry of Justice Strategic Plan (Justice Strategic Plan) (2014-2018)Analysis of Afghan Government Strategic Policies4. A Critique of the Approach to Institutional Reform in Afghanistan, and a Proposal for a New Approach: Grounded Institutional ReformGrounded Institutional Reform: A Revised Approach for the Countries with Poor Infrastructure, Limited Market Expansion Opportunities, and a Willing GovernmentRationales for Anti-Informal Institutions Positions: The Problems of Formalizing Informal Institutions in AfghanistanTheoretical Underpinning of Anti-Informal Institutions in AfghanistanPractical Problems of Absorbing Informal Institutions in AfghanistanWhat Would Reforms Based on Grounded Institutional Reform Look Like in Afghanistan?Conclusions and RecommendationsBibliographyAppendix IAppendix II