Development of Islamic Finance in Bosnia and Herzegovina

Abstract

This paper represents the analysis of Islamic finance development in Balkan with a case study of Bosnia and Herzegovina (B&H). In this analysis we will use the data from the local Islamic financial institutions and global reports with regard to the Islamic finance industry. Since Islamic finance has been practiced in B&H for years, its development has seen a remarkable success. Islamic banking, led by Bosnia Bank International (BBI), is the major player in the field. However, the industry faces a number of issues and challenges that impede its further development. Among major issues are a lack of legal and regulatory framework(s), a low level of public awareness about Islamic finance that leads to a low demand for its products, and a lack of government support for its development. Thus, in order for Islamic finance to develop further within the Balkan countries there is a need for a better promotion, legal and regulatory framework that will facilitate this endeavor and new players that will increase competition and add additional value to this market.