THE ROLE OF ISLAMIC FINANCE IN BANKING OPERATIONS.

Abstract

Acquiring and combining different banking practices and regulatory approaches across diverse financial systems has become an important mechanism for achieving inclusive and stable financial development. The present study aimed to examine the principles and challenges that influence the adoption of Islamic banking services in Central Asian countries, particularly Uzbekistan, by analyzing the institutional and socio-economic conditions under which commercial banks tend to engage in Sharia-compliant financial operations. Multiple researchers independently screened the available literature, extracted the core indicators, assessed the reliability and relevance of the included studies, and performed comparative and SWOT analyses. Based on the survey of Islamic finance awareness and banking preferences conducted among entrepreneurs and individual consumers, our analysis indicates a growing interest in non-interest-based banking products and services. The analysis reveals that despite regulatory constraints and limited public awareness, the potential benefits and structural resilience of the Islamic financial model remain prominent, indicating a viable and scalable structure. The synergy between faith-based financial ethics and economic modernization can promote the outcome of sustainable financial inclusion. This research contributes to the discourse on financial diversification in emerging markets and offers a foundation for designing targeted reforms and banking innovations to advance Islamic financial integration. Our findings can help inform future policy initiatives as well as the implementation of Islamic finance mechanisms in inclusive financial system management.