Islamic Banking and its Integration into the Russian Financial Market

This thesis explores the integration of Islamic finance and its potential within the Russian Federation emphasizing its role in diversifying the financial landscape against the background of Western sanctions and the country's significant Muslim demographic. It begins by detailing the historical development and global evolution of Islamic finance highlighting its adherence to Sharia principles such as ethical investments and risk-sharing, which distinguish it from conventional banking systems. The study then shifts focus to Russia examining the legislative advancements that facilitate Islamic finance, notably the adoption of Federal Law No. 417. This law established an experimental legal regime for Islamic banking demonstrating a proactive governmental approach to integrating Sharia-compliant financial practices. The research identifies various potential customer bases for Islamic finance in Russia including the significant Muslim population and ethically conscious investors. Key challenges such as regulatory barriers, limited public awareness and the geographic concentration of services are discussed with solutions proposed to enhance educational efforts and expand services nationwide. The thesis concludes that Islamic finance not only offers opportunities for economic diversification but also aligns with international standards and local cultural contexts thereby contributing to Russia’s economic resilience. Overall, the study successfully achieved its research goal providing a foundational analysis for future strategic developments in Islamic finance within Russia and suggesting a multi-faceted approach for broader integration.