Opportunities for Adapting Islamic Banking Products to the Russian Legislative Framework

• Author: V. Malyaev
• Position: National Research University Higher School of Economics (Nizhny Novgorod, Russia)
• Pages: 62-80

BRICS LAW JOURNAL Volume IV (2017) Issue 3

oPPoRTunITIES FoR aDaPTInG ISLaMIC BanKInG PRoDuCTS

To THE RuSSIan LEGISLaTIVE FRaMEwoRK

VLADIMIR MALYAEV,

National Research University Higher School of Economics

(Nizhny Novgorod, Russia)

DOI: 10.21684/2412-2343-2017-4-3-62-80

In countries with a large Muslim population who are not willing to trust their savings to

traditional banks, as well as a signicant number of Muslim entrepreneurs who are not

using the services of traditional banks, the creation of Islamic nancial institutions can

improve the eciency of the nancial market and accelerate its development. Russia is one

of these countries. Islamic nancial products can attract both Russian companies as well as

traditional companies oriented to the observance of the Quran. While Russian legislation

does not provide opportunities for the application of Islamic nancial products, the issues

of adaptation and the possibility of realising these projects in Russia are becoming very

relevant. The aim of this paper is to present the results of a study devoted to the analysis

of possibilities of the application of Islamic nancial products in Russia.

Keywords: Islamic nancial products; Islamic banking; legislative problems.

Recommended citation: Vladimir Malyaev, Opportunities for Adapting Islamic

Banking Products to the Russian Legislative Framework, 4(3) BRICS Law Journal 62–80

(2017).

Table of Contents

Introduction

1. The Mechanisms of Interaction between the World’s Financial System

and National Systems

2. Types of Financial Systems, Their Comparative Advantages

3. Paradoxes of Globalisation

VLADIMIR MALYAEV 63

4. The Regulatory Principles of Socio-Economic Activities in Islam

5. Questions of Formation of the Islamic Financial System in Russia:

Islamic Finance in the Russian Legal Field

Conclusion

Introduction

Currently, problems of adapting national nancial systems to processes and issues

of globalisation are important areas of modern economic and nancial sciences. In

recent years, it is possible to ascertain the negative impact of sanctions by the U.S.

and EU countries on the Russian economy:

– worse performance of the banking system;

– limited access to external nancial markets (the increased cost of funding for

banks and corporations);

– blow to the Russian industry, heavily dependent on imports of strategically

important resources and technologies (possible deterioration in the financial

condition of the corporate enterprises-borrowers);

– the impact on stability of energy exports;

– the fall of the stock market;

– outow of foreign investments;

– ruble depreciation (risks increased volatility of exchange rate dynamics).

The steps Russia can take in response to this hostile attack include:

– a sharp change in the balance of trade, you must impor t substitution (food,

machinery, high and medium technology);

– export diversication;

– dramatically increase the eciency of the economy;

– creating chains of added value.

It is necessary to nd the answer to the following problematic question: What

should the banking system provide (nance) in light of these global changes?

The answer can only be this: the objec tive of the banking system is to provide the

possibility of nancing new projects, without resorting to borrowing from Western

nancial markets. One of the suggestions is to transition to alternative markets for

nancial borrowing – not in the West but in the East.

Russia has intensied its diplomatic engagements in the Islamic world and has

clearly identied Muslim countries as an ideal ground to strengthen their position

in the world order of the XXI century. This is due to the expansion of monetary

and nancial cooperation between Russia and the Arab nancial and industrial

investment and intensication of investment activity of Islamic banks in the Russian

Federation in areas densely populated by Muslims (in regions such as Tatarstan,

Bashkortostan, Chechnya and other).