Risks of Islamic Banking Implementation (Through the Example of the Russian Federation)

Abstract

The presented study examines the potential risks of Islamic banking during its implementation (through the example of the Russian Federation).Aim. The study aims to identify the potential risks of Islamic banking in Russia.Tasks. The author considers the main differences between traditional and Islamic banks, systematizes the types of risks in Islamic banks, analyzes Sharia and economic risks, and examines the potential risks of Islamic financial institutions through the example of the Amal Financial House.Methods. This study uses the dialectical method, methods of statistical research, classification, systems and structural analysis, graphical analysis, generalization and systematization, scientific methods of cognition (observation, comparison, analysis, and synthesis).Results. The main differences between traditional and Islamic banks and the types of risks in Islamic banks are systematized. The system of Sharia control is considered through the example of an Is lamic financial organization (Islamic banking). Through the example of the Amal Financial House, the major risks are identified — for Islamic banking in financing using such Islamic financial instruments as murabaha and ijara, and for investors using mudaraba.Conclusions. Systematization of the main differences between Islamic and traditional banks shows that operations are based on a real asset to exclude contradictions with Sharia (Islamic canon law). The author distinguishes between two types of risk in Islamic banks: economic and Sharia. Sharia control is divided into internal and external (through the example of the Amal Financial House), which ensure the functioning of Islamic banking to prevent risk in unauthorized transactions within the framework of Islam. The author analyzes the activities of the Amal Financial House in 2015-2019 related to financing using such Islamic financial instruments as murabaha and ijara. The return on investment products shows positive dynamics, i.e. investors receive a steady income, even though there is a risk of losing the invested funds.