Development of Islamic finance in Balkan region: Opportunities and challenges

Balkan as a region has always been a target due to its strategic position, natural resources, and the potential for infrastructural connectivity in between the continent of Europe and Asia. For that reason, this region historically has witnessed clashes and unrests and has been an issue at the table of great powers. Another characteristic of Balkan is the mixed population in religious, ethnic, and cultural background. Recently, besides all developments, Islamic finance has been raised as an issue. Many reasons lie behind the need of developing Islamic Finance in this region. Firstly, the region is home to a considerable Muslim Population which means that is a religious duty. Secondly, this region has all the historical background that advocates the development of Islamic finance starting from education, revitalization of institutional experience, and revitalization of lost Islamic heritage. And thirdly, the universalism of Islam as a religion reflects the same to Islamic finance by that enabling use of the system also for the non-Muslim population. Some progress has been made towards developing Islamic finance in Balkan resulting in banks, microfinance institutions, presentations, fairs, teaching programs, research, project finance, etc. Nevertheless, the development of Islamic finance across Balkan countries still has not gained momentum considering expectations. Nonetheless, Islamic finance is an economic issue its development in Balkan and throughout the world at large is affected by non-economic factors imposing for elaboration on those factors. Over this research, we have tried to light up upon ambiguities that are created for Islamic finance particularly in the Balkan region. At the same time, possibilities for the revitalization of Islamic heritage being in the form of education, culture or waqfs have taken place in this research. Using surveys and interviews we have tried to measure financial literacy, interest rate literacy, lending and borrowing culture, preferences over Islamic and conventional finance, and willingness for having Islamic finance both educationally and applicably. Meanwhile, we have considered current developments of Islamic finance intending to instruct further expansion. Finally, we have concluded with insights on the ways Islamic finance can be developed by providing policy-oriented suggestions.