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Historical Paths and Contemporary Evolution of Sharia-Compliant Finance in Central Asian Regions

Published online by Cambridge University Press:  22 January 2025

Abhishek Thommandru ,
Abdumukhtor Rakhmanov ,
Shokhrukhbek Tillaboev  and
Varda Mone
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Abstract

This research paper has been complied by Abhishek Thommandru, Abdumukhtor Rakhmanov, Shokhrukhbek Tillaboev and Varda Mone. It explores the historical trajectories and modern dynamics of Islamic financial law in Central Asia, a region characterised by a rich tapestry of cultural influences and a predominantly Muslim population. The paper traces the evolution of Islamic finance from its roots in Sharia principles, such as the avoidance of riba, gharar, and maysir, to its current sophisticated framework that promotes equity, transparency, and social welfare. The unique blend of traditional practices and modern regulations in Central Asian Islamic financial jurisprudence is examined, along with the factors driving the industry's growth, including increasing awareness, regulatory support, and integration with global markets.

The paper also delves into the key principles underpinning Islamic financial institutions, such as the prohibition of interest, risk-sharing, and asset-backed financing, and discusses the progress made by Central Asian countries in establishing regulatory frameworks, Shariah compliance oversight, and legal infrastructure. The development of Islamic banking practices, capital markets and takaful in the region is also explored, highlighting the availability of Sharia-compliant products and services. However, the challenges of harmonising Islamic and conventional laws, ensuring consistent Shariah interpretation, and establishing effective dispute resolution mechanisms are also addressed.

The economic impact of Islamic finance in promoting financial inclusion, attracting investments, and fostering stability is also analysed, along with the influence of cultural considerations, social welfare, and ethical investing on the acceptance and growth of Islamic finance in Central Asia. Case studies from Kazakhstan, Uzbekistan, and Tajikistan are presented to illustrate successful implementation strategies. The paper concludes by emphasising the potential for Islamic finance to drive sustainable economic development in Central Asia and the need for ongoing research, collaboration, and policy support to navigate the complex dynamics of this evolving field. The findings contribute to a deeper understanding of the historical trajectories and modern dynamics of Islamic financial law in Central Asia, providing valuable insights for policymakers, practitioners, and researchers in this rapidly growing sector.

Keywords

Islamic financeCentral AsiaSharia lawregulationeconomics
Type
International Perspectives
Information
Legal Information Management , Volume 24 , Issue 3 , September 2024 , pp. 191 - 202
Copyright
Copyright © The Author(s), 2025. Published by British and Irish Association of Law Librarians

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References

Endnotes

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