Journal of Islamic Banking and Finance

Some Issues to Consider when Regulating Islamic Banking Business in Secular Countries
Agnélio M. P. Chicava Pita

Abstract
This paper aimed to identify some of the main issues that secular regulators should consider when regulating Islamic banking in their jurisdictions. Focused on experiences of four secular states, the analysis was sustained on the fact of regulatory framework of secular jurisdictions can not make reference to religious issues or even to Shari´ahlaw and Islamic banking has been growing in secular jurisdictions, creating challenges to secular regulators in facilitating innovation and avoiding unnecessary barriers for Islamic banking entry and expansion. It was concludedamong others that (i) to accommodate Islamic banking activities secular regulators need to reform prudential regulations (ex-ant factors) to give the same treatment Islamic banks and conventional banks, and (ii) secular regulators should develop a specific infrastructure for Islamic banking (ex-post factors) or creating them with particularities of Islamic banking or even let Islamic banks operate within the existing conventional infrastructure.It was also concluded that the reactive approach is the best for secular regulators.

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