A
Amortization
Process of paying off debt over time in regular installments.
Asset
Anything of value that can be converted into cash.
B
Bailout
Financial support given to a failing company or economy to prevent collapse.
Bank Run
When many bank customers withdraw their deposits at the same time due to fear that the bank may fail.
Bankruptcy
A legal process for individuals or businesses who cannot repay their outstanding debts.
Barter
Trading goods directly without using money.
Bear Market
A financial market in which prices are falling or are expected to fall.
Bond
A fixed income instrument that represents a loan made by an investor to a borrower.
Bubble
A situation where asset prices rise rapidly above their real value and eventually collapse.
Bull Market
A financial market of a group of securities in which prices are rising or are expected to rise.
C
Capital
Financial assets or the financial value of assets.
Capitalism
An economic system where private individuals or companies own and control production and trade.
Cash Flow
The net amount of cash and cash-equivalents moving into and out of a business.
Central Bank
A national bank that provides financial and banking services for its country's government.
Collateral
An asset that a lender accepts as security for a loan.
Commodity
A basic good used in commerce that is interchangeable with other commodities of the same type.
Compound Interest
Interest calculated on both the original loan amount and the interest already added to it.
Credit
The ability to borrow money or receive goods now and pay for them later.
Credit Score
A number depicting a consumer's creditworthiness.
Cryptocurrency
A digital currency in which transactions are verified by a decentralized system.
D
Debt
Money borrowed by one party from another.
Deficit
The amount by which something, especially a sum of money, is too small.
Deflation
A decrease in the general price level of goods and services.
Derivative
A financial contract whose value depends on another asset such as stocks, commodities, or currencies.
Devaluation
The deliberate downward adjustment of the value of a country's money.
Digital Currency
Money that exists completely in digital form rather than physical form.
Diversification
A risk management strategy that mixes a wide variety of investments within a portfolio.
Dividend
A reward, cash or otherwise, that a company gives to its shareholders.
E
Economy
The state of a country or region in terms of the production and consumption of goods.
Emergency Fund
A bank account with money set aside to pay for large, unexpected expenses.
Equity
The value of the shares issued by a company.
Exchange Rate
The value of one currency for the purpose of conversion to another.
F
Federal Reserve
The central banking system of the United States of America.
Fiat Money
Inconvertible paper money made legal tender by a government decree.
Forex
A global decentralized market for the trading of currencies.
Fractional Reserve Banking
A system in which only a fraction of bank deposits are backed by actual cash.
G
GDP
Gross Domestic Product. The total value of goods produced and services provided in a country.
Gharar
An Islamic finance concept referring to excessive uncertainty or ambiguity in a contract.
Gold Standard
The system by which the value of a currency was defined in terms of gold.
H
Halal
Permissible or lawful in traditional Islamic law.
Haram
Forbidden or proscribed by Islamic law.
Hawala
An informal money transfer system based on trust, where funds are settled through a network of brokers rather than physical transfer.
Hedge Fund
An alternative investment that uses pooled capital to invest in a variety of assets.
Hisbah
An Islamic system of market supervision where authorities ensure fair trade, honest weights, and consumer protection.
Hoarding (Ihtikar)
Holding scarce resources to manipulate prices, which is forbidden in Islam.
Hyperinflation
Rapid, excessive, and out-of-control general price increases in an economy.
I
Ijarah
An Islamic leasing contract where an asset is purchased and then rented to a customer for a fixed payment.
Index Fund
A type of mutual fund with a portfolio constructed to match or track the components of a market index.
Inflation
A general increase in prices and fall in the purchasing value of money.
Interest
Money paid for the use of borrowed funds, usually calculated as a percentage of the loan amount.
Investment
An asset or item acquired with the goal of generating income or appreciation.
Islamic Banking
A banking system that is based on the principles of Islamic law (Shariah).
L
Liability
A company's financial debt or obligations that arise during business operations.
Liquidity
The availability of liquid assets (cash) to a market or company.
Loan
Money, property or other material goods that is given to another party in exchange for future repayment.
M
Margin
The money borrowed from a broker to purchase an investment and is the difference between the total value and loan amount.
Microfinance
Banking service provided to unemployed or low-income individuals with no other access to financial services.
Monetary Policy
The policy laid down by the central bank involving the management of money supply.
Money Creation
The process by which the money supply of a country is increased.
Money Supply
The total amount of money in circulation or in existence in a country.
Monopoly
The exclusive possession or control of the supply of or trade in a commodity or service.
Mortgage
A legal agreement by which a bank lends money in exchange for taking title of the debtor's property.
Mudarabah
An Islamic finance contract where one party provides capital and the other provides expertise.
Murabaha
An Islamic financing method where a seller discloses the original cost of an asset and sells it with an agreed profit margin.
Musharakah
A joint enterprise or partnership structure in Islamic finance where partners share in profits and losses.
Mutual Fund
An investment program funded by shareholders that trades in diversified holdings.
N
National Debt
The total amount of money that a country's government has borrowed.
Net Worth
The value of the assets a person or corporation owns, minus the liabilities they owe.
O
Opportunity Cost
The potential benefit that is lost when you choose one alternative over another.
Overdraft
A deficit in a bank account caused by drawing more money than the account holds.
P
Passive Income
Earnings derived from a rental property, limited partnership or other enterprise in which a person is not actively involved.
Petrodollar
A U.S. dollar paid to an oil-exporting country.
Ponzi Scheme
A form of fraud in which belief in a nonexistent enterprise is fostered by the payment of quick returns to early investors.
Portfolio
A grouping of financial assets such as stocks, bonds, commodities, and cash equivalents.
Principal
The original sum of money borrowed in a loan, or put into an investment.
Profit
A financial gain between the amount earned and the amount spent in buying or producing something.
Profit-Loss Sharing (PLS)
A mechanism in Islamic finance where partners share both the profits and the losses.
Q
Qard al-Hasan
A benevolent loan in Islamic finance that is interest-free.
Quantitative Easing
The introduction of new money into the money supply by a central bank.
R
Recession
A period of temporary economic decline during which trade and industrial activity are reduced.
Riba
An Islamic finance term for interest or usury, which is strictly prohibited.
Risk
The possibility that an investment's actual return will be different than expected.
S
Savings
The money one has saved, especially through a bank or official scheme.
Scarcity
The state of being scarce or in short supply; shortage.
Securities
Proof of ownership or debt that has been assigned a value and may be sold.
Short Selling
The sale of a security that is not owned by the seller, or that the seller has borrowed.
Speculation
Investment in stocks, property, or other ventures in the hope of gain but with the risk of loss.
Stagflation
Persistent high inflation combined with high unemployment and stagnant demand.
Stock
A type of security that signifies proportionate ownership in the issuing corporation.
Stock Market
A market in which shares of publicly held companies are issued and traded.
Subprime Loan
A type of loan offered at a rate above prime to individuals who do not qualify for prime-rate loans.
Sukuk
An Islamic financial certificate representing ownership in an asset, designed to comply with Shariah principles.
Supply and Demand
The amount of a commodity, product, or service available and the desire of buyers for it.
T
Takaful
A type of Islamic insurance wherein members contribute money into a pool system to guarantee each other against loss.
Tax
A compulsory contribution to state revenue, levied by the government.
Trade
The action of buying and selling goods and services.
V
Value
The regard that something is held to deserve; the importance, worth, or usefulness of something.
Venture Capital
Capital invested in a project in which there is a substantial element of risk.
W
Waqf
An endowment made by a Muslim to a religious, educational, or charitable cause.
Wealth
An abundance of valuable possessions or money.
Z
Zakat
Obligatory almsgiving and religious tax in Islam.