Development of Islamic Finance in Bosnia and Herzegovina

Abstract

UDK 28:74:336(497.6)

This article analyses the development of Islamic finance in the Balkans employing the case study of Bosnia and Herzegovina (B&H). For this analysis, we will use the data of the local Islamic financial institutions and the global reports on the Islamic financial industry. Islamic financing has been in use in B&H for years and have seen remarkable success. Islamic banking led by Bosna Bank International (BBI) banc, is the main protagonist in this field. However, the industry is facing a number of issues and challenges that hinder its further development. Some of the largest issues are the lack of legal and regulatory frameworks, the lack of government support, and low public awareness regarding Islamic finance which in turn results in a low demand for their services. To conclude, for Islamic finance further development in Balkans in general, and in B&H in particular, better promotional, legal and regulatory frameworks, which would provide smooth operation and help reach a larger number of potential clients is required. This would potentially encourage competition and help the development of the market.