Islamic Finance In Russia: Problems Of Formation And Market Review

Abstract

This research work is dedicated to the process of formation of an Islamic finance in Russia. Subject of research is the current state of Islamic finance in Russia, its role in the development of economy and attracting foreign investments and internal capital generation as well as challenges faced by the industry at the institutional, regulatory, industry, awareness and grassroots levels. Further, the research aims to explore any specific approach that Russian Federation might take in the development of its Islamic finance industry given diversity and geographical and ethnical dispersion of the Russian Muslim ethnic groups as well as impact of the secularism on the overall level of social acceptance of the industry. The Russian Federation became interested in alternative partner finance back in the 90’s of the XX century. At the same time, individual banks made the first attempts to apply the principles of Islamic finance. The second wave of initiatives fell on the period 2008–2009 years - after the global financial crisis, due to the growing interest in 2014 in the context of a complicated foreign policy situation and the phased introduction of economic sanctions. There was a need to attract alternative sources of investment, which, among other things, turned out to be Islamic finance. From 1992 to the present, Russia has accumulated some experience of interaction with the Islamic finance industry. This research paper provides a comprehensive review of the more than 25-year history of the development of the Islamic financial market in Russia in the context of analyzing its problems and prospects. After considering the main provisions, concepts, features and principles of Islamic finance, as well as bringing numerical and geographical data on the industry, I discussed about the work that had been done in this field in Russian Federation. And then about the factors that are limiting the development of Islamic finance. The history of the development of the Islamic financial market in Russia is presented in chronological order with division into industry components and Russia's experience in the development of each of them - Islamic banking, Islamic insurance and Islamic capital market. In conclusion, a brief analysis of the current state of the micromarket of Islamic financial institutions in Russia is given and the main prospects that Islamic finance can provide it are indicated.