THE DEVELOPMENT OF ISLAMIC FINANCE IN UZBEKISTAN: OPPORTUNITIES AND CHALLENGES
Keywords:
Islamic finance • Uzbekistan • riba avoidance • financial inclusion • dual banking • mixed methods • regulatory framework • sukuk • Murabaha • SME financing • Central Asia • Law No. LRU-1126 • religiosity-driven exclusionAbstract
The global Islamic financial services industry (IFSI) reached USD 5.98 trillion in 2024 — a 21% year-on-year increase — and is projected to reach USD 9.7 trillion by 2029 (ICD–LSEG, 2025). Within this trajectory, Uzbekistan represents a market of exceptional significance: 38 million people, 97% Muslim, GDP growing at 7.7% in 2025, yet lacking operative Islamic banking until the enactment of Law No. LRU-1126 on 27 March 2026. Employing a sequential explanatory mixed-methods design — a structured survey (n = 193) and 18 semi-structured interviews with regulators, bankers, Shariah scholars, and academics, supported by systematic secondary data analysis — this study examines the opportunities and challenges confronting Islamic finance in Uzbekistan at this historic inflection point. Key findings: religiosity is the strongest predictor of adoption willingness (r = 0.54, p < 0.01); 61.7% of respondents have avoided conventional loans on religious grounds; a severe awareness–adoption gap exists (74.6% riba awareness vs. 18.7% Ijarah awareness); the most critical barrier is limited institutional availability (M = 4.41); and SME financing via Murabaha and Musharakah represents the highest-impact near-term opportunity. Comparative benchmarking against Kazakhstan, Kyrgyzstan, Malaysia, and the UAE reveals critical unresolved gaps: full tax neutrality, deposit guarantee for profit-sharing accounts, and AAOIFI standard adoption. The study advances a five-pillar policy agenda for the 2026–2030 implementation period.
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