DEVELOPMENT OF ISLAMIC FINANCE IN MUSLIM-MINORITY COUNTRIES: CHALLENGES AND PATHWAYS

Abstract

This thesis examines the development of Islamic finance in Muslim-minority countries (MMCs), focusing on the structural barriers hindering its integration and the strategic pathways available for reform. It analyzes five jurisdictions—the United Kingdom, Singapore, the Philippines, Australia, and Russia—using a standardized diagnostic framework based on five interrelated pillars: legal and regulatory systems, institutional capacity, human capital, market demand, and financial product development. The study adopts a qualitative methodology using structured content analysis and ordinal scoring across the five-pillar framework. Severity heatmaps and GAP benchmarking tools are used to assess each country’s distance from aspirational standards, while a typology of gaps helps classify jurisdictions by readiness and reform capacity. A context-sensitive Monitoring and Assessment (M&A) framework—adapted from results-based management approaches—is also introduced to track institutional performance and reform implementation over time. Findings reveal that legal ambiguity, institutional fragmentation, and underdeveloped product ecosystems form mutually reinforcing barriers. Even jurisdictions with partial accommodation face systemic disconnects, while those lacking legal recognition encounter foundational constraints. Across all cases, human capital shortages and low public engagement remain persistent obstacles to Islamic finance adoption. The thesis offers several original contributions: (i) integrating Islamic normative principles into secular regulatory analysis; (ii) applying a cross-country five-pillar framework across diverse MMCs; and (iii) proposing diagnostic and reform tools—including heatmaps, typologies, and M&A matrices—for policymakers. It concludes that sustainable development of Islamic finance in MMCs requires more than regulatory approval. Success depends on ecosystem development, stakeholder alignment, and phased, context-sensitive reform strategies. The study provides a replicable roadmap for embedding Islamic finance within secular legal environments and contributes to a more inclusive, pluralistic global financial system.

Date of Award	2025
Original language	American English
Awarding Institution	HBKU College of Islamic Studies