Zia Haider Rahman's critically acclaimed debut, In the Light of What We Know, picked up the James Tait Black fiction prize on Monday evening.
The Valley: A Hundred Years in the Life of a Yorkshire Family by Richard Benson won the biography prize.
The two prizes are awarded annually by the University of Edinburgh.
Chairman of the James Tait Black Prize for fiction, Professor Randall Stevenson, said of the winning fiction entry: "Zia Haider Rahman addresses a whole range of issues - the war in Afghanistan, the rise of Muslim fundamentalism and the banking crisis.
"Moreover, he also explores problematic areas of politics and finance, which are often exiled from the pages of fiction, immersing his readers, dauntingly but comprehensibly.
"The novel's impressive scope is complemented by Rahman's ability to locate the personal in the political."
Benson's The Valley: A Hundred Years in the Life of a Yorkshire Family, sees the author draw on his own family history set in a mining community.
Biography judge Dr Jonathan Wild said: "Richard Benson's book represents a remarkable reclamation of a once prevalent social group now almost entirely gone."
Each winner receives Â£10,000 each in prize money.
The James Tait Black Awards were founded in 1919 by Janet Coats, the widow of publisher James Tait Black, to commemorate her husband's love for books.
Previous winners include DH Lawrence, Graham Greene, Angela Carter and Ian McEwan.
A novel about a disillusioned banker who is reunited with an old friend before embarking on an epic journey has won the UK's oldest literary award.