Legal Challenges in Establishing the Islamic Capital Market in Uzbekistan

Purpose: This study aims to identify legal hurdles preventing the penetration ‎of the Islamic finance industry in Uzbekistan and formulates vital policy recommendations to develop a regulatory framework for the industry. ‎ Design/methodology/approach: A library research method and legal analysis is employed to study a range of legal matters varying from banking and capital market legislation to some newly introduced laws. Additionally, issues pertaining to Islamic finance in the tax law and the civil code of the nation are scrutinized‎. Findings: The finding of the paper shows that there exist some legal barriers hindering the complete implementation of the Islamic finance industry. They are not only in one area of national legislation but also exist in various parts of the legal system. Accordingly, the Uzbek government is recommended to develop a sound legal and regulatory framework that provides a favourable environment for the activities of Islamic finance institutions. Originality/value: Unlike some previous studies, this paper specifically examines the legal barriers faced by the Islamic finance industry in Uzbekistan, shows some of its implications, and provided relevant policy recommendations. Practical implications: Following the recommendations of this paper by the Uzbek government could increase investment flow into the economy from both other countries and local people. Research limitations/implications: Due to the general scope of the study its findings are mainly based on secondary (rather than primary) data and a review of previous literature. Hence, it makes the finding and recommendations of the study broad in perspective.

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