The feasibility of adopting Islamic Banking system under the existing laws in Uganda

Abstract

Purpose: In 2014, Islamic finance assets are estimated to have exceeded US$2 trillion with over 100 products and an annual growth of over 20.7 per cent, across more than 76 countries, most of which are members of the Organization of Islamic Cooperation (OIC). Despite this remarkable market expansion, numerous OIC members such as Uganda are yet to fully adopt this unique financial system because of regulatory constraints. Thus, the purpose of this paper is to examine the extent to which Uganda can benchmark the Malaysian experience and best practices to overcome the regulatory challenges in

Determinants of the intention to adopt Islamic banking in a non-Islamic developing country

“…Further, behavioral belief influences the attitude toward adoption of Islamic banking in Uganda, while normative belief influences subjective norms of the public in Uganda (Lujja et al, 2016a). In another study conducted by Lujja et al (2016b) on the feasibility of adopting the Islamic banking system under the existing laws in Uganda, it was found that there is need for relevant laws to be amended such as section 37(a) and 38(1) of the Financial Institutions Act 2004 and section 29(3)(a) of the Bank of Uganda Act 2000. It was also noted by Lujja et al (2016b) that tax legislation needs amendments to ensure a level playing field for Islamic and conventional finance products.…”

“…Previous studies on adoption of Islamic banking using evidence from Uganda suggest a number of determinants of adoption of Islamic banking (Lujja et al, 2016a;Lujja et al, 2016b;Kaawaase and Nalukwago, 2017;Lujja et al, 2018;Bananuka et al, 2019). In their study of modeling public behavioral intention to adopt Islamic banking in Uganda using the theory of reasoned action, Lujja et al (2016a) found that attitude influences behavioral intention to adopt Islamic banking in Uganda.…”

“…In another study conducted by Lujja et al (2016b) on the feasibility of adopting the Islamic banking system under the existing laws in Uganda, it was found that there is need for relevant laws to be amended such as section 37(a) and 38(1) of the Financial Institutions Act 2004 and section 29(3)(a) of the Bank of Uganda Act 2000. It was also noted by Lujja et al (2016b) that tax legislation needs amendments to ensure a level playing field for Islamic and conventional finance products. Lujja et al (2016b) recommended that Islamic banking businesses be given support in the form of prudential supervision and industrial development from regulators and averred that this will uphold public interest in Islamic banking.…”

“…It was also noted by Lujja et al (2016b) that tax legislation needs amendments to ensure a level playing field for Islamic and conventional finance products. Lujja et al (2016b) recommended that Islamic banking businesses be given support in the form of prudential supervision and industrial development from regulators and averred that this will uphold public interest in Islamic banking. Lujja et al (2018) found that Muslims are more knowledgeable about Islamic banking culture as compared to non-Muslims but note that both groups have low awareness about Islamic banking terminologies.…”

Islamic banking: an exploratory study of public perception in Uganda

“…Over the years, this ambition continued to be deliberated by Muslim professionals and bankers. IB was an important agenda that was widely discussed in the 2008 Organization of Islamic Cooperation (OIC) business forum hosted in Uganda (The Independent, 2010; Lujja, 2013, 2016).…”