Development of Islamic Finance in Selected Balkan Countries: Prospects and Challenges

The development of Islamic finance has attracted a lot of attention by researchers all over the world. During the recent global financial crisis, it demonstrated a degree of resilience and proved to be an alternative to conventional banking industry. It attracts Muslims and non-Muslims alike. This paper represents the analysis of Islamic finance development in selected Balkan countries, namely: Bosnia and Herzegovina, Croatia and Albania. In this analysis we will use the data from the local Islamic financial institutions and global reports with regard to the Islamic finance industry. Although Islamic finance has been practiced in a number of these countries for years, its development has not seen a remarkable success. This may be attributed to a number of issues such as 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, a shortage of Islamic finance professionals, a lack of standardized products and accounting policies as well as a lack of competition. 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.