Comparative analysis of Islamic banking regulation in Kyrgyzstan and Central Asian countries

Abstract

The Islamic banking regulation plays a key role in ensuring the development of this type of financial activity, especially for countries with a predominantly Muslim population, such as the Kyrgyz Republic and other Central Asian countries, in particular the Republic of Kazakhstan and the Republic of Tajikistan. Therefore, the study aims to analyse and compare the peculiarities of the legal framework that regulates the activities of Islamic banks. Legal analysis, statistical analysis, grouping, generalisation, comparison, and abstract and logical thinking methods were used in the article. The information basis for this study included the current laws and regulations of Kyrgyzstan, Kazakhstan, and Tajikistan in the field of Islamic banking regulation. The study analyses the laws that establish the principles of operating and regulation of Islamic banks, as well as the regulatory documents of the Central banks of the Kyrgyz Republic, Kazakhstan, and Tajikistan. The study identifies and analyses the key requirements established for the establishment of Islamic banks, Shariah boards operating within such banks, as well as prudential standards for financial institutions operating on the principles of Islamic finance. A comparative analysis of regulatory and legal documents has made it possible to formulate both common and different approaches used to ensure and regulate the activities of Islamic banks. It is established that the key difference between the legal regulation of Islamic banks in Kazakhstan, as compared to Kyrgyzstan and Tajikistan, is the lack of possibility for banking structures to combine traditional banking activities with activities based on the principles of Islamic Finance. The study results can be used by the authorities that form the legislative framework and regulate the activities of Islamic banks, and entities operating in the banking system, as well as by the scientific community interested in ensuring the Islamic banking regulation in Kyrgyzstan and other Central Asian countries