Islamic finance adoption among entrepreneurs in Kyrgyzstan’s dual banking system: a qualitative study
Ibrahim Halil Sugozu, Junus Ganiev, Ainura Turdalieva, Iraima Dorbonova, Abdurashid ZhoraevPurpose
This study aims to explain why Islamic finance adoption remains limited among entrepreneurs in Kyrgyzstan despite strong ethical and religious appeal. It shows that adoption depends on financial knowledge and institutional capacity rather than values alone. It argues that ethical preference does not become market uptake without these foundations.
Design/methodology/approach
A qualitative design was adopted using semi-structured interviews with 25 entrepreneurs and senior managers across key regions of Kyrgyzstan. Data were analyzed through thematic analysis, which identified four interrelated themes.
Findings
Participants generally perceive Islamic finance as ethically legitimate and religiously compatible. However, actual adoption is contingent on price competitiveness, accessibility, transaction speed and institutional reliability. Knowledge gaps and limited product diversity reduce perceived distinctiveness relative to conventional banking. Structural barriers include limited staff expertise, operational complexity and inconsistent religious guidance, which together weaken trust and increase decision uncertainty. Entrepreneurs express cautious optimism about future growth, conditional on measurable improvements in institutional capacity, service quality and financial literacy.
Practical implications
The findings indicate clear managerial priorities, including improved service design and process efficiency, product innovation, stronger staff training, clearer governance and targeted financial literacy programs to convert ethical interest into sustained uptake.
Originality/value
The study provides entrepreneur-centered qualitative evidence from a post-Soviet Central Asian dual banking context. It extends predominantly survey-based literature by clarifying demand-side adoption mechanisms and highlighting the mediating role of knowledge between ethical preference and actual financial behavior.