Implementing Islamic Banking in Uzbekistan

Abstract

Purpose: This research investigates the implementation of the
Islamic banking system in Uzbekistan, exploring the need,
potential demand, and supply of Sharia-compliant products and
services. It identifies opportunities and challenges and provides
insights into overcoming them, addressing the question: why
introduce an Islamic banking system in Uzbekistan?
Research Methodology: Using an exploratory mixed-methods
approach, empirical data was collected from 400 public members
and 45 professionals in Tashkent through surveys and structured
interviews. Statistical methods were employed for data analysis.
Findings: Findings indicate a significant potential demand for
Islamic banking in Uzbekistan. The research recommends revising
existing legislation, Central Bank regulations, the Tax Code, Civil
Code, Law on Commodities, and developing a regulatory
framework for Islamic Financial Institutions (IFI) and human
capital. Cooperation with the Islamic Development Bank Group
and other foreign organizations is suggested to facilitate these
changes.
Practical implications: Practical implications include providing a
roadmap for regulators, policymakers, governments, and the
financial industry on introducing Islamic banking in Uzbekistan.
One proposed solution is the incorporation of Islamic financial
instrument principles through the equitization of mortgages.
Originality/Value: This study is the first empirical research
assessing the market for Islamic banking in Uzbekistan,
complementing existing literature and addressing the gap in
empirical research. It also lays the groundwork for further research
in this area.