Experience of Normative Regulation of Islamic Banking in United Kingdom and Possibility of Applying in Bosnia and Herzegovina
Experience of Normative Regulation of Islamic Banking in United Kingdom and Possibility of Applying in Bosnia and Herzegovina

Summary/Abstract: In the environment where the whole financial system is based on conventional – interest business model, introduction of interest – free business model represents a challenge, but quite a hard work as well. It is particularly difficult in the conditions of undeveloped financial system, un-integrated banking services market, disrespectful to European Union Directives on consolidation of banking sector by which creation of equal conditions for all banks in the market is instructed and European Convention on Human Rights and Elementary Freedoms, and still distinctive and tensed relations between nationalities. Therefore, the issue of creating conditions for conducting Islamic banks business and other financial institutions tend to transpose from rationaleconomic discussions into nationality-politics discussions. Existing legal framework for banking in Federation of Bosnia and Herzegovina has no restrictions for setting up and business activity of Islamic banks, but it prevents expansion of their business. There are similar conditions in relation to unequal tax treatment of Islamic and conventional banks. In attempting to reach acceptable legal solution of this issue it is of great importance to consider the experience of Great Britain, which by chain of activities, initiatives and law amendments created favorable conditions for efficient business activity of Islamic banks in its financial services market. In this paper, and based on the analysis, we implied one of possible approaches to normative regulation with aim to create conditions needed for development of Islamic banking in conventional economic system. The result today is, five years after passing legal solutions presented in this paper, that Great Britain is leading country in Europe by level of foreign inward investments in Islamic finances sector.

• Details
• Contents