Islamic banking and finance: potential approach for economic sustainability in China

Abstract

PurposeThe purpose of this paper is to explore the unique aspects of Islamic finance and its role in economic development. It also explores the suitability of Islamic finance in China.Design/methodology/approachThe paper explores the potential of Islamic banking and finance for economic sustainability in China. This study adopts the content analysis approach and focuses on various aspects of finance. Moreover, a critical investigation has been done by using various indicators of a new finance system adoption by considering the economic, cultural, religious and political aspects of China.FindingsThe study reveals that China already tested Islamic finance on a pilot basis in Ningxia, China. China is suitably positioned to adopt Islamic finance for its economic development. It also reports that Islamic finance will be more helpful to implement One Belt One Road initiative of China, as the Gulf and Arab Islamic finance-based countries are the major partners of China. This study analyzes Islamic micro-finance literature and proposes suitable measures for adoption in China.Practical implicationsDespite some limitations, the findings have a large implication on Islamic financing in general. It will be helpful to researchers and practitioners to understand the Islamic finance model for implementing it in a new environment.Social implicationsThis study analyzes the demand, rules and regulations, related challenges and potential of launching Islamic banking and finance in China.Originality/valueThis study analyzes the demand, rules and regulations, related challenges and potential of launching Islamic banking and finance in China. The paper fills a gap to the existing literature on Islamic finance uniqueness, challenges and opportunities from the perspective of a non-Muslim country.