Factors delaying the establishment of the Islamic banking system in Afghanistan

Salim, Mohammad Salim; Qoyum, Abdul

doi:10.33545/27068919.2021.v3.i1f.515

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“…A number of studies have explored the challenges that hinder the establishment and growth of Islamic banking in Afghanistan. In their examination of the factors contributing to the delay in establishing Islamic banking in Afghanistan, Salim and Qoyum (2021) identify six significant factors: political instability, a weak economy, inadequate legislative support, limited public information, lack of endorsement from religious scholars, and a scarcity of specialists in the field. While their study has limitations in terms of depth and coherence, it provides valuable insights into these challenges.…”

Section: Challenges To Growth Of Islamic Banking In Afghanistanmentioning

confidence: 99%

Faithful Finance: Unlocking Banking Islamization in Afghanistan

2023

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This paper explores the challenges and prospects associated with the adoption of Islamic banking in Afghanistan. Despite the global growth and acceptance of Islamic banking by approximately 50 countries by 1997, Afghanistan only embraced it between 2008–2009. The decision to convert conventional banks to Islamic ones, driven by the involvement of interest rates (riba) in the prevailing system, necessitates a thorough examination of the challenges and the need for an appropriate response. The study employs qualitative, analytical, and exploratory methods, reviewing secondary sources and conducting unstructured interviews with key stakeholders, including officials from the Da Afghanistan Bank (DAB), staff of Islamic banking institutions, experts in Islamic banking and finance, and consumers. The findings reveal that the challenges in promoting Islamic banking in Afghanistan are more complex and multi-layered than commonly understood, stemming from the legal system, regulatory capacities and mindset, banking services, and public perception. The paper emphasizes the importance of addressing these challenges comprehensively to safeguard the already fragile economic and financial sector. Failure to do so may lead to further deterioration. This research contributes to the existing body of knowledge by shedding light on the unique challenges and prospects of Islamic banking in Afghanistan, providing valuable insights for policymakers, regulators, and practitioners in shaping an effective transformation strategy.

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Section: Challenges To Growth Of Islamic Banking In Afghanistanmentioning

confidence: 99%