LEGAL CHALLENGES IN ESTABLISHING THE ISLAMIC CAPITAL MARKET IN UZBEKISTAN

Abstract

Purpose — This study aims to examine the possibility of introducing the Islamic capital market (ICM) in Uzbekistan and to investigate the legal challenges inhibiting the process. Consequently, important policy recommendations are proposed. ‎ Design/Methodology/Approach — It employed library research, scrutinised legal documents, and conducted interviews related to the ICM in Uzbekistan. The analysis involved both primary data from a series of ‎interviews, and secondary data from available literature and the country’s financial legislation.‎ Findings — The research findings show that despite the existence of a large demand for ICM products in Uzbekistan, its capital market is not ready for the introduction of the industry products at the current stage. Thus, several legal reforms and changes to current financial regulations are necessary for the industry to be introduced and flourish in the country. Originality/Value — Unlike some previous studies, this article specifically examines the legal barriers faced by the ICM industry in Uzbekistan, shows some of its implications, and provides relevant policy recommendations. Practical Implications — Following the recommendations of this paper, the government of Uzbekistan can make necessary legal reforms that would increase investment flow into the economy from both its own people and foreign investors. Research Limitations/Implications — Due to the confined scope of the study, its findings are limited to legal issues relating to the ICM in Uzbekistan. Hence, the findings of the paper cannot be generalised to other countries or other sectors of the Islamic finance industry in the country.