Islamic windows: Case of Malaysia and lessons for the post-Soviet countries

Abstract

The article discusses a model of increasing the availability of financial services in the post-Soviet countries through the creation of Islamic windows that built into the structure of traditional financial organizations. This study does not discuss issues of Islamic law related to Islamic windows. The article is also not an introduction to Islamic banking. Instead, based on the evidence obtained mostly from Malaysia we show the evolution of the Islamic financial industry, one of the important stages of which was the launch of Islamic windows. We describe advantages and disadvantages of the Islamic window model, as well as the recent experience of other developing countries in adapting this model in their jurisdictions. The article aims to offer recommendations, including a system of strategic and operational decisions, for launching of Islamic windows, taking into account the innovative experience of Malaysia. In particular, a qualitative approach (literature review, content analysis, case studies, in-depth expert interviews) is used to identify problems and obstacles facing banking regulators and market participants in creating Islamic windows. The results of this study allowing to identify important details will be useful to participants and organizers of the Islamic financial market in the post-Soviet area. This study can also be used in the educational process as a reference material on Islamic financial practices that have developed in the world.