INTEGRATION OF ISLAMIC FINANCE INTO A DEVELOPING ECONOMY: OPPORTUNITIES AND TRANSFORMATIONAL IMPACT IN THE CASE OF UZBEKISTAN

Abstract

Islamic finance has emerged as one of the fastest-growing segments of the global financial system, offering ethical, asset-backed, and risk-sharing alternatives to conventional finance. For developing economies, Islamic finance presents significant opportunities to expand financial inclusion, attract foreign investment, strengthen small and medium-sized enterprises, and promote sustainable growth. This article examines the prospects for integrating Islamic finance into the developing economy of Uzbekistan and analyzes its potential transformational impact. Uzbekistan, with its Muslim-majority population, strategic geographic location, and ongoing economic reforms, represents a promising environment for Islamic financial development. The study uses qualitative analysis, comparative review, and policy evaluation methods. Findings indicate that Islamic finance can diversify Uzbekistan’s banking sector, mobilize dormant savings, enhance infrastructure financing, and deepen integration with global Islamic capital markets. However, regulatory adaptation, legal reforms, professional capacity building, and public awareness remain essential prerequisites. The article concludes that successful integration of Islamic finance could become a strategic driver of inclusive and resilient economic transformation in Uzbekistan.